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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, 2022
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
dva-20220331_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 29, 2022, the number of shares of the registrant’s common stock outstanding was approximately 94.6 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,
 20222021
Dialysis patient service revenues$2,716,281 $2,714,587 
Other revenues101,274 105,414 
Total revenues2,817,555 2,820,001 
Operating expenses:  
Patient care costs2,018,529 1,938,330 
General and administrative294,820 281,426 
Depreciation and amortization172,944 165,701 
Equity investment income, net(7,046)(8,058)
Total operating expenses2,479,247 2,377,399 
Operating income338,308 442,602 
Debt expense(73,791)(67,014)
Other (loss) income, net(1,786)1,168 
Income before income taxes262,731 376,756 
Income tax expense57,013 85,211 
Net income205,718 291,545 
Less: Net income attributable to noncontrolling interests(43,596)(54,142)
Net income attributable to DaVita Inc.$162,122 $237,403 
Earnings per share attributable to DaVita Inc.:  
Basic net income$1.68 $2.18 
Diluted net income$1.61 $2.09 
Weighted average shares for earnings per share:
Basic shares96,342 109,014 
Diluted shares100,503 113,852 
See notes to condensed consolidated financial statements.
1


DAVITA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in thousands)
Three months ended March 31,
 20222021
Net income$205,718 $291,545 
Other comprehensive income (loss), net of tax:  
Unrealized gains on interest rate cap agreements:  
Unrealized gains41,132 4,882 
Reclassifications of net realized losses into net income1,033 1,033 
Unrealized gains (losses) on foreign currency translation:62,212 (62,544)
Other comprehensive income (loss)104,377 (56,629)
Total comprehensive income310,095 234,916 
Less: Comprehensive income attributable to noncontrolling interests(43,596)(54,142)
Comprehensive income attributable to DaVita Inc.$266,499 $180,774 
 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, 2022December 31, 2021
ASSETS  
Cash and cash equivalents$327,502 $461,900 
Restricted cash and equivalents93,079 93,060 
Short-term investments19,407 22,310 
Accounts receivable2,044,346 1,957,583 
Inventories107,722 107,428 
Other receivables441,363 427,321 
Prepaid and other current assets79,261 72,517 
Income tax receivable16,034 25,604 
Total current assets3,128,714 3,167,723 
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 assets2,784,140 2,824,787 
Intangible assets, net of accumulated amortization of $64,525 and $60,730, respectively
191,096 177,693 
Equity method and other investments237,788 238,881 
Long-term investments47,866 49,514 
Other long-term assets185,166 136,677 
Goodwill7,072,903 7,046,241 
 $17,087,010 $17,121,488 
LIABILITIES AND EQUITY  
Accounts payable$433,137 $402,049 
Other liabilities737,160 709,345 
Accrued compensation and benefits565,458 659,960 
Current portion of operating lease liabilities399,101 394,357 
Current portion of long-term debt185,728 179,030 
Income tax payable99,863 53,792 
Total current liabilities2,420,447 2,398,533 
Long-term operating lease liabilities2,622,039 2,672,713 
Long-term debt8,687,487 8,729,150 
Other long-term liabilities108,954 119,158 
Deferred income taxes839,003 830,954 
Total liabilities14,677,930 14,750,508 
Commitments and contingencies
Noncontrolling interests subject to put provisions1,390,757 1,434,832 
Equity:  
Preferred stock ($0.001 par value, 5,000 shares authorized; none issued)
  
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 capital595,403 540,321 
Retained earnings516,459 354,337 
Treasury stock (2,104 and zero shares, respectively)
(233,318) 
Accumulated other comprehensive loss(34,870)(139,247)
Total DaVita Inc. shareholders' equity843,771 755,508 
Noncontrolling interests not subject to put provisions174,552 180,640 
Total equity1,018,323 936,148 
 $17,087,010 $17,121,488 
See notes to condensed consolidated financial statements.
3


DAVITA INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
(dollars in thousands)
Three months ended March 31,
 20222021
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 amortization172,944 165,701 
Stock-based compensation expense24,904 23,595 
Deferred income taxes(41)18,688 
Equity investment loss (income), net664 (2,924)
Other non-cash charges, net4,714 3,979 
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable(66,270)(224,274)
Inventories849 (5,303)
Other receivables and prepaid and other current assets(17,966)13,756 
Other long-term assets3,520 (6,521)
Accounts payable21,402 (75,504)
Accrued compensation and benefits(95,927)(126,330)
Other current liabilities26,912 26,970 
Income taxes52,473 62,719 
Other long-term liabilities(11,701)(11,793)
Net cash provided by operating activities322,195 154,304 
Cash flows from investing activities: 
Additions of property and equipment(123,108)(144,913)
Acquisitions(5,166)(3,668)
Proceeds from asset and business sales11,353 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-maturity5,070 5,349 
Proceeds from sale of other debt and equity investments3,773 11,879 
Purchase of equity method investments(2,962)(3,200)
Distributions from equity method investments470 978 
Net cash used in investing activities(118,366)(124,366)
Cash flows from financing activities:
Borrowings354,285 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 interests4,929 10,689 
Proceeds from sales of additional noncontrolling interests3,673  
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 cash3,363 (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 year554,960 501,790 
Cash, cash equivalents and restricted cash at end of the period$420,581 $1,061,040 
See notes to condensed consolidated financial statements.
4


DAVITA INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(dollars and shares in thousands)
Three months ended March 31, 2022
 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, 2021$1,434,832 97,289 $97 $540,321 $354,337  $ $(139,247)$755,508 $180,640 
Comprehensive income:
Net income28,381 162,122 162,122 15,215 
Other comprehensive income104,377 104,377 
Stock award plan53 (3,488)(3,488)
Stock-settled stock-based
 compensation expense
24,626 24,626 
Changes in noncontrolling
 interest from:
Distributions(42,881)(22,571)
Contributions3,197 1,732 
Acquisitions and divestitures2,421 883 883 
Partial purchases(822)(1,774)(1,774)
Fair value remeasurements(34,835)34,835 34,835 
Other464 (464)
Purchase of treasury stock(2,104)(233,318)(233,318)
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, 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 

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, certain fair value estimates, accounting for income taxes 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, 2021 (2021 10-K). Prior period classifications 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, 2022Three months ended March 31, 2021
U.S. dialysisOther — Ancillary servicesConsolidatedU.S. dialysisOther — Ancillary servicesConsolidated
Dialysis patient service revenues:
Medicare and Medicare Advantage$1,464,086 $$1,464,086 $1,480,297 $$1,480,297 
Medicaid and Managed Medicaid189,655 189,655 187,243 187,243 
Other government80,800 116,895 197,695 80,184 106,830 187,014 
Commercial834,579 52,425 887,004 835,479 51,498 886,977 
Other revenues:
Medicare and Medicare Advantage83,596 83,596 85,595 85,595 
Medicaid and Managed Medicaid538 538 300 300 
Commercial1,338 1,338 6,034 6,034 
Other(1)
5,976 9,836 15,812 6,675 11,162 17,837 
Eliminations of intersegment revenues(22,169)(22,169)(27,003)(4,293)(31,296)
Total$2,552,927 $264,628 $2,817,555 $2,562,875 $257,126 $2,820,001 
(1)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 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. The 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.
6


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

Other revenues. Other revenues consist of revenues earned by the Company's non-dialysis ancillary services as well as fees for management and administrative services to outpatient dialysis businesses that the Company does not consolidate. Other revenues are estimated 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,
 20222021
Net income attributable to DaVita Inc.$162,122 $237,403 
Weighted average shares outstanding:
Basic shares96,342 109,014 
Assumed incremental from stock plans4,161 4,838 
Diluted shares100,503 113,852 
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.
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, 2022December 31, 2021
Debt
securities
Equity
securities
TotalDebt
securities
Equity
securities
Total
Certificates of deposit and other time deposits$23,230 $ $23,230 $23,226 $ $23,226 
Investments in mutual funds and common stocks 44,043 44,043  48,598 48,598 
 $23,230 $44,043 $67,273 $23,226 $48,598 $71,824 
Short-term investments$8,228 $11,179 $19,407 $8,227 $14,083 $22,310 
Long-term investments15,002 32,864 47,866 14,999 34,515 49,514 
 $23,230 $44,043 $67,273 $23,226 $48,598 $71,824 
7


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 and recorded at amortized cost, which approximated their fair values at March 31, 2022 and December 31, 2021.
Equity 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 are held within a trust to fund existing obligations associated with 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. dialysisOther — Ancillary servicesConsolidated
Balance at December 31, 2020$6,309,928 $609,181 $6,919,109 
Acquisitions91,979 81,265 173,244 
Divestitures(1,745) (1,745)
Foreign currency and other adjustments (44,367)(44,367)
Balance at December 31, 2021$6,400,162 $646,079 $7,046,241 
Acquisitions 4,442 4,442 
Divestitures   
Foreign currency and other adjustments 22,220 22,220 
Balance at March 31, 2022$6,400,162 $672,741 $7,072,903 
Balance at March 31, 2022:
Goodwill$6,400,162 $796,684 $7,196,846 
Accumulated impairment charges (123,943)(123,943)
$6,400,162 $672,741 $7,072,903 
The Company did not recognize any goodwill impairment charges during the three months ended March 31, 2022 and 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 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 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 therapies; the 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 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; the timing, scope and effectiveness of federal, state and local 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.
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,
8


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 2021 10-K, none of the Company's various other reporting units were considered at risk of significant goodwill impairment as of March 31, 2022. 
6.     Long-term debt
Long-term debt was comprised of the following:
As of March 31, 2022
March 31,
2022
December 31, 2021Maturity dateInterest rate
Estimated fair value(1)
Senior Secured Credit Facilities:  
Term Loan A(2)
$1,575,000 $1,596,875 8/12/2024LIBOR+1.50%$1,578,938 
Term Loan B-12,681,405 2,688,263 8/12/2026LIBOR+1.75%$2,671,349 
Revolving line of credit(2)
  8/12/2024LIBOR+1.50%
Senior Notes:
4.625% Senior Notes2,750,000 2,750,000 6/1/20304.625 %$2,571,250 
3.75% Senior Notes1,500,000 1,500,000 2/15/20313.75 %$1,320,000 
Acquisition obligations and other notes payable(3)
128,476 130,599 2022-20364.87 %$128,476 
Financing lease obligations(4)
291,949 299,128 2023-20384.55 %
Total debt principal outstanding8,926,830 8,964,865 
Discount, premium and deferred financing costs(5)
(53,615)(56,685)
 8,873,215 8,908,180 
Less current portion(185,728)(179,030)
 $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 variable interest rate components in effect as of March 31, 2022.
(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.
(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 were reduced by a discount of $4,473 and deferred financing costs of $27,207, and the carrying amount of the Company's senior notes were reduced by deferred financing costs of $40,914 and increased by a debt premium of $15,909.
During the first three months of 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.
As of March 31, 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 $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.
9


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, 2022 and December 31, 2021, which are classified in "Other long-term assets" on its consolidated balance sheet: 
 Three months ended
March 31, 2022
Fair value
Notional amountLIBOR maximum rateEffective dateExpiration dateDebt expenseRecorded OCI gainMarch 31,
2022
December 31, 2021
2019 cap agreements$3,500,000 2.00%6/30/20206/30/2024$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, 2022 and 2021.
The Company’s weighted average effective interest rate on its senior secured credit facilities at the end of the first quarter of 2022 was 2.54%, based on the current margins in effect for its senior secured credit facilities as of March 31, 2022, as described above.
The Company’s overall weighted average effective interest rate for the three months ended March 31, 2022 was 3.35%, and as of March 31, 2022 was 3.52%.
As of March 31, 2022, the Company’s interest rates were fixed on approximately 52% of its total debt.
As of March 31, 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, of which there were none as of March 31, 2022. The Company also had approximately $108,095 in letters of credit outstanding under a separate bilateral secured letter of credit facility as of March 31, 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, 2022 and December 31, 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 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.
10


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, 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.
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 and an additional subpoena 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 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
11


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.
Other Proceedings
2021 Antitrust Indictment and Putative Class Action Suit: On July 14, 2021, an indictment was returned by a grand jury in the U.S. District Court, District of Colorado against the Company and its former chief executive officer in the matter of U.S. v. DaVita Inc., et al. The 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 Sherman Act. On September 14, 2021, DaVita and its former chief executive officer filed a motion to dismiss the indictment. On 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, 2022, the court denied the motion to dismiss. On April 15, 2022, a jury returned a verdict in the Company’s favor, acquitting both the Company and its former chief executive officer on all counts. On April 20, 2022, the court entered judgments of acquittal and closed the case. On August 9, 2021, DaVita was named as defendant in a consolidated putative class action complaint in the matter of In re Outpatient Medical Center Employee Antitrust Litigation in the U.S. District Court, Northern District of Illinois. This class action complaint seeks to bring an action on behalf of certain groups of individuals employed by the Company between February 1, 2012 and January 5, 2021. On October 18, 2021, the Company filed a motion to dismiss the class action complaint. The Company disputes the allegations in 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 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 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 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 overturn the Sixth Circuit decision. On January 19, 2022, the Company filed its brief in support of the Sixth Circuit decision, and the Company intends to defend against the appeal accordingly. The court heard oral arguments on March 1, 2022.
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.
* * *
12


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 $13,027.
8.    Shareholders' equity
Stock-based compensation
During the three months ended March 31, 2022, the Company granted 981 restricted and performance stock units with an aggregate grant-date fair value of $109,177 and a weighted-average expected life of approximately 3.5 years and 130 stock-settled stock appreciation rights with an aggregate grant-date fair value of $4,573 and a weighted-average expected life of approximately 4.5 years.
As of March 31, 2022, the Company had $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, 2022 and 2021:
Three months ended March 31, 2022Three months ended March 31, 2021
Shares repurchasedAmount paidAverage paid per shareShares repurchasedAmount paidAverage paid per share
Open market repurchases:2,104 $233,318 $110.90 2,949 $322,333 $109.28 
The Company repurchased 798 shares of its common stock for $87,994 at an average cost of $110.28 per share subsequent to March 31, 2022 through May 4, 2022.
Effective on December 17, 2021, the Company's Board of Directors (Board) 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 transactions, derivative transactions, tender offers, Rule 10b5-1 plans or any combination of the foregoing, depending upon market conditions and other considerations.
As of May 4, 2022, the Company had a total of $2,062,627 available under the current authorization for additional share repurchases. Although this share repurchase authorization does not have an expiration date, the Company remains subject to share repurchase limitations including under the terms of its current senior secured credit facilities.
9.     Accumulated other comprehensive loss
Three months ended March 31, 2022Three months ended March 31, 2021
Interest
rate cap
agreements
Foreign
currency
translation
adjustments
Accumulated
other
comprehensive
loss
Interest
rate cap
agreements
Foreign
currency
translation
adjustments
Accumulated
other
comprehensive
loss
Beginning balance$(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 income1,377  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)
13


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

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, 2022, the Company acquired dialysis businesses consisting of three dialysis centers loca