DAVITA INC

Previous wording

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that are forward-looking statements within the meaning of the federal securities laws and as such are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements could include, among other things, statements about our balance sheet and liquidity, our expenses, revenues, billings and collections, patient census, availability or cost of supplies, including without limitation the impact of the reduction in clinical and other supplies delivered to DaVita by Baxter International Inc. or its subsidiaries (collectively, Baxter) due to closures of Baxter facilities following Hurricane Helene, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, the effects of the recent Change Healthcare (CHC) cybersecurity outage on us and our operations, current macroeconomic, marketplace and labor market conditions, and overall impact on our patients and teammates, as well as other statements regarding our future operations, financial condition and prospects, capital allocation plans, expenses, cost saving initiatives, other strategic initiatives, use of contract labor, government and commercial payment rates, expectations related to value-based care (VBC), integrated kidney care (IKC), Medicare Advantage (MA) plan enrollment and our international operations, expectations regarding increased competition and marketplace changes, including those related to new or potential entrants in the dialysis and pre-dialysis marketplace and the potential impact of innovative technologies, drugs, or other treatments on the dialysis industry, expectations regarding the impact of our continuing cost-savings initiatives and our stock repurchase program. All statements in this report, other than statements of historical fact, are forward-looking statements. Without limiting the foregoing, statements including the words "expect," "intend," "will," "could," "plan," "anticipate," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on DaVita's current expectations and are based solely on information available as of the date of this report. DaVita undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law. Actual future events and results could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things:

Current wording

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that are forward-looking statements within the meaning of the federal securities laws and as such are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements could include, among other things, statements about our balance sheet and liquidity, our expenses, revenues, billings and collections, patient census, the impact of the recent cybersecurity incident experienced by the Company, including the ultimate duration and extent of the disruption to our network and operations, availability or cost of supplies, including without limitation the impact of evolving trade policies and tariffs and any reduction in clinical and other supplies due to any disruptions experienced by third party vendors, including with respect to our ability to provide home dialysis services, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, the effects on us and our operations of any interruptions in key functions performed by our third party service providers or suppliers, current macroeconomic, marketplace and labor market conditions, and overall impact on our patients and teammates, as well as other statements regarding our future operations, financial condition and prospects, capital allocation plans, expenses, cost saving initiatives, other strategic initiatives, use of contract labor, government and commercial payment rates, expectations related to value-based care (VBC), integrated kidney care (IKC), Medicare Advantage (MA) plan enrollment and our international operations, expectations regarding increased competition and marketplace changes, including those related to new or potential entrants in the dialysis and pre-dialysis marketplace and the potential impact of innovative technologies, drugs, or other treatments on the dialysis industry, and expectations regarding our share repurchase program. All statements in this report, other than statements of historical fact, are forward-looking statements. Without limiting the foregoing, statements including the words "expect," "intend," "will," "could," "plan," "anticipate," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on DaVita's current expectations and are based solely on information available as of the date of this report. DaVita undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law. Actual future events and results could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncert…

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Previous wording

•current macroeconomic and marketplace conditions, including without limitation, the impact of global events and political or governmental volatility; the impact of the domestic political environment and related developments on the current healthcare marketplace, our patients and on our business; the continuing impact of the COVID-19 pandemic on our operations, reputation, financial condition and the chronic kidney disease (CKD) population and our patient population; supply chain challenges and disruptions, including without limitation with respect to certain key services provided to us and certain critical clinical supplies and equipment, and including any impacts on our supply chain as a result of natural disasters; the potential impact of new or potential entrants in the dialysis and pre-dialysis marketplace and potential impact of innovative technologies, drugs, or other treatments on our patients and industry; elevated teammate turnover or labor costs; the impact of continued increased competition from dialysis providers and others; and our ability to respond to challenging U.S. and global economic and marketplace conditions, including, among other things, our ability to successfully identify cost saving opportunities and to invest in and implement cost saving initiatives;

Current wording

•external conditions, including those related to general economic, marketplace and global health conditions, including without limitation, the impact of global events and political or governmental volatility; the impact of the domestic political environment and related developments on the current healthcare marketplace, our patients and on our business; the continuing impact of the COVID-19 pandemic on our financial condition and the chronic kidney disease (CKD) population and our patient population; supply chain challenges and disruptions, including without limitation with respect to certain key services, critical clinical supplies and equipment we obtain from third parties, and including any impacts on our supply chain and cost of supplies as a result of natural disasters or evolving trade policies, including tariffs; the potential impact of new or potential entrants in the dialysis and pre-dialysis marketplace and potential impact of innovative technologies, drugs, or other treatments on our patients and industry; elevated teammate turnover or labor costs; the impact of continued increased competition from dialysis providers and others; and our ability to respond to challenging U.S. and global economic and marketplace conditions, including, among other things, our ability to successfully identify cost saving opportunities;

Previous wording

•risks arising from potential changes in or new laws, regulations or requirements applicable to us, including, without limitation, those related to healthcare, antitrust matters, including, among others, non-competes and other restrictive covenants, and acquisition, merger, joint venture or similar transactions and/or labor matters, and potential impacts of changes in enforcement thereof or related litigation impacting, among other things, coverage or reimbursement rates for our services or the number of patients enrolled in or that select higher-paying commercial plans, and the risk that we make incorrect assumptions about how our patients will respond to any such developments;

Current wording

•risks arising from potential changes in or new laws, regulations or requirements applicable to us, including, without limitation, those related to trade policy, healthcare, privacy, antitrust matters, and acquisition, merger, joint venture or similar transactions and/or labor matters, and potential impacts of changes in interpretation or enforcement thereof or related litigation impacting, among other things, coverage or reimbursement rates for our services or the number of patients enrolled in or that select higher-paying commercial plans, and the risk that we make incorrect assumptions about how our patients will respond to any such developments;

Previous wording

•our reliance on significant suppliers, service providers and other third party vendors to provide key support to our business operations and enable our provision of services to patients, such as, among others, CHC, Baxter and other suppliers of certain pharmaceuticals, services or critical clinical products; and risks resulting from a closure, reduction or other disruption in the services or products provided to us by such suppliers, service providers and third party vendors, such as the closure of certain Baxter manufacturing facilities following Hurricane Helene;

Current wording

•our reliance on significant suppliers, service providers and other third party vendors to provide key support to our business operations and enable our provision of services to patients, including, among others, suppliers of certain pharmaceuticals, administrative or other services or critical clinical products; and risks resulting from a closure, reduction or other disruption in the services or products provided to us by such suppliers, service providers and third party vendors;

Previous wording

•noncompliance by us or our business associates with any privacy or security laws or any security breach by us or a third party, such as the recent cyberattack on CHC, including, among other things, any such non-compliance or breach involving the misappropriation, loss or other unauthorized use or disclosure of confidential information;

Current wording

•noncompliance by us or our business associates with any privacy or security laws or any security breach by us or a third party, such as the recent cybersecurity incident experienced by the Company, including, among other things, any such non-compliance or breach involving the misappropriation, loss or other unauthorized use or disclosure of confidential information;

Previous wording

•our ability to attract, retain and motivate teammates and our ability to manage potential disruptions to our business and operations, including potential work stoppages, operating cost increases or productivity decreases whether due to union organizing activities, legislative or other changes, demand for labor, volatility and uncertainty in the labor market, the current challenging and highly competitive labor market conditions, including due to the ongoing nationwide shortage of skilled clinical personnel, or other reasons;

Current wording

•our ability to attract, retain and motivate teammates, including key leadership personnel, and our ability to manage potential disruptions to our business and operations, including potential work stoppages, operating cost increases or productivity decreases whether due to union organizing activities, legislative or other changes, demand for labor, volatility and uncertainty in the labor market, the current challenging and highly competitive labor market conditions, including due to the ongoing nationwide shortage of skilled clinical personnel, or other reasons;

Previous wording

•our ability to complete and successfully integrate and operate acquisitions, mergers, dispositions, joint ventures or other strategic transactions on terms favorable to us or at all; and our ability to successfully expand our operations and services in markets outside the United States, or to businesses or products outside of dialysis services;

Current wording

•our ability to complete and successfully integrate and operate acquisitions, mergers, dispositions, joint ventures or other strategic transactions on terms favorable to us or at all; and our ability to continue to successfully expand our operations and services in markets outside the United States, or to businesses or products outside of dialysis services;

Previous wording

•the variability of our cash flows, including, without limitation, any extended billing or collections cycles including, without limitation, due to defects or operational issues in our billing systems or in the billing systems or services of third parties on which we rely, such as the operational issues at CHC resulting from a recent cyberattack; the risk that we may not be able to generate or access sufficient cash in the future to service our indebtedness or to fund our other liquidity needs;

Current wording

•the variability of our cash flows, including, without limitation, any extended billing or collections cycles including, without limitation, due to defects or operational issues in our billing systems, the impact of the recent cybersecurity incident experienced by the Company or defects or operational issues in the billing systems or services of third parties on which we rely; the risk that we may not be able to generate or access sufficient cash in the future to service our indebtedness or to fund our other liquidity needs;

Previous wording

•the effects on us or others of natural or other disasters, public health crises or adverse weather events such as hurricanes, earthquakes, fires or flooding;

Current wording

•the effects on us or others of natural or other disasters, public health crises or severe adverse weather events such as hurricanes, earthquakes, fires or flooding;

Previous wording

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

Current wording

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

Previous wording

•our aspirations, goals and disclosures related to environmental, social and governance (ESG) matters, including, among other things, evolving regulatory requirements affecting ESG standards, measurements and reporting requirements; and

Current wording

•our goals and disclosures related to environmental, social and governance (ESG) matters, including, among other things, evolving regulatory requirements affecting ESG standards, measurements and reporting requirements; and

Previous wording

Developments in general economic and market conditions have directly and indirectly impacted the Company and in the future could have a material adverse impact on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition, results of operations, share price, cash flows and/or liquidity. Many of these external factors and conditions are interrelated, including, among other things, inflation, potential interest rate volatility and other economic conditions, labor market conditions, wage pressure, the increased mortality rates of our patients and other ESKD or CKD patients, supply chain challenges and the potential impact and application of innovative technologies, drugs or other treatments. Certain of these impacts could be further intensified by concurrent global events such as the ongoing conflicts between Russia and Ukraine and in Israel, Gaza and the surrounding areas, which have continued to drive sociopolitical and economic uncertainty across the globe, as well as severe weather events and other natural disasters, such as Hurricane Helene and Hurricane Milton, which have impacted national supply chain challenges, among other things.

Current wording

Developments in external conditions, including those related to general economic, marketplace, environmental and global health conditions, have directly and indirectly impacted the Company and in the future could have a material adverse impact on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition, results of operations, share price, cash flows and/or liquidity. Many of these external factors and conditions are interrelated, including, among other things, inflation, interest rate volatility and other economic conditions, labor market conditions, wage pressure, the increased mortality rates of our patients and other ESKD or CKD patients, supply chain challenges and the potential impact and application of innovative technologies, drugs or other treatments. Certain of these impacts could be further intensified by concurrent global events that have continued to drive sociopolitical, geopolitical and economic uncertainty; by severe weather events and other natural disasters; and by the impact of new policies implemented by the U.S. administration. For additional discussion of general economic, marketplace and global health conditions that could impact our business, see Part I Item 1. "Business" and Part I Item 1A. "Risk Factors" in our 2024 10-K.

Previous wording

In the third quarter of 2024, treatment per day volumes were generally flat compared to the second quarter of 2024. We continue to experience a negative impact on revenue and treatment volume due to, among other things, elevated mortality rates of our patients in comparison to the periods prior to the pandemic and the associated adverse impact on our patient census. Treatment volumes during the year have been and may continue to be adversely impacted by higher than expected missed treatment rates, which during the quarter were driven primarily by severe weather events. In addition, new-to-dialysis admission rates, treatment volumes, future revenues and non-acquired growth, among other things, could continue to be negatively impacted over time to the extent that the ESKD and CKD populations experience sustained elevated mortality levels. The magnitude of these cumulative impacts could have a material adverse impact on our results of operations, financial condition and cash flows.

Current wording

In the first quarter of 2025, treatment per day volumes were approximately flat compared to the fourth quarter of 2024. We experienced a negative impact on revenue and treatment volume due to, among other things, a particularly severe flu season that drove continued elevated mortality rates in our patient population as well as missed treatments driven by severe weather events. New-to-dialysis admission rates were strong in the quarter, though these admission rates, treatment volumes, future revenues and non-acquired growth, among other things, could continue to be negatively impacted over time to the extent that the ESKD and CKD populations experience sustained elevated mortality levels. These mortality levels could be influenced by, among other things, the impact of infectious diseases on our patient population and the availability and use of vaccines, treatments and therapies as described in Part I Item 1A. "Risk Factors" of our 2024 10-K, and the magnitude of these cumulative impacts could have a material adverse impact on our results of operations, financial condition and cash flows.

Previous wording

During the quarter we continued to pay elevated compensation levels to our teammates compared to the prior year. We expect certain of these increased staffing and labor costs to continue, due to, among other factors, the continuation of a challenging healthcare labor market. The cumulative impact of these increased costs could be material. In addition, potential staffing shortages or other potential developments or disruptions related to our teammates, if material, could ultimately lead to the unplanned closures of certain centers or adversely impact clinical operations, or may otherwise have a material adverse impact on our ability to provide dialysis services or the cost of providing those services, among other things. Our industry has also experienced increased union organizing activities. For example, union petitions have been filed in nine of our clinics in California and eight of these petitions are in different stages of the voting process and have been subject to legal challenges. We also have experienced a week-long attempted union-related work stoppage in these eight clinics, which concluded without impacting our ability to provide patient care. Regardless of the outcome of the ongoing elections, other teammates at other clinics may file similar petitions in the future, and these petitions, if filed, may lead to additional elections. If a significant portion of our teammates were to become unionized, we could experience, among other things, potential additional work stoppages or other business disruptions; adverse impacts to our financial results due to the costs of bargaining or implementing a grievance procedure and processing grievances; decreases in our operational flexibility and efficiency; or negative impacts on our employee culture. In addition, we are and may continue to be subject to targeted corporate campaigns by union organizers in response to which we have been and expect to continue to be required to expend substantial resources, both time and financial. Any of these events or circumstances, including our responses to such events or circumstances, could have a material adverse effect on our employee relations, treatment growth, productivity, business, results of operations, financial condition, cash flows and reputation. For further discussion of the risks related to rising labor costs and union organizing activities, see the discussion in the risk factors in Part I, Item 1A Risk Factors of our 2023 10-K under the heading, "Our business is labor intensive..."

Current wording

Global economic conditions and political and regulatory developments, including, among other things, inflationary pressures and new U.S. administration policies have increased, and may continue to increase, our expenses, including, among others, staffing, labor, and supply costs. We expect certain of these increased staffing and labor costs to continue, due to, among other factors, the continuation of inflationary conditions and a challenging healthcare labor market. The cumulative impact of these increased staffing, labor, and supply costs and other expenses could be material. Our industry has also experienced increased union organizing activities. For example, union petitions have been filed in nine of our clinics in California and eight of these petitions are in different stages of the voting process and have been subject to legal challenges. For additional details on the risks related to rising labor costs and union organizing activities, see the discussion in Part I Item 1A. "Risk Factors" of our 2024 10-K under the headings, "Our business is labor intensive..." and "External conditions, including those related to general economic, marketplace and global health conditions..."

Previous wording

We believe that the aforementioned recent developments and general economic and marketplace conditions will continue to impact the Company in the future. Their ultimate impact depends on future developments that are highly uncertain and difficult to predict.

Current wording

We believe that the aforementioned recent developments and general economic, marketplace and global health conditions will continue to impact the Company in the future. Their ultimate impact depends on future developments that are highly uncertain and difficult to predict.

Previous wording

CHC has publicly reported online and in notices to affected individuals that it identified protected health information (PHI), or personally identifiable information (PII), from users of the CHC systems, and while CHC has been conducting investigations and data forensics, to date, we have not been informed that any of our data, including any PHI or PII from our patients, was impacted by the CHC Outage. However, the ultimate impact of the CHC Outage remains subject to future developments and risks that are difficult to predict. These risks may include, among other things, a recurrence of system outages or service suspensions or the risk that our information technology systems or our proprietary information and sensitive or confidential data, including PHI or PII, may have been compromised through the CHC Outage, any of which may have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation. For a discussion of the risks associated with outages, disruptions or incidents at third parties on which we rely, see the risk factors in Part I, Item 1A of our 2023 10-K under the headings, "Failing to effectively maintain, operate or upgrade our information systems or those of third-party service providers upon which we rely..." and "Privacy and information security laws are complex…"

Current wording

For a discussion of the risks associated with privacy and security incidents and risks associated with our information systems or those of our third party service providers upon which we rely, see the discussions in Part I Item 1A. "Risk Factors" of our 2024 10-K under the headings, "Privacy and information security laws are complex…" and "Failing to effectively maintain, operate or upgrade our information systems or those of third-party service providers upon which we rely...". These risks include, among other things, business or other operational interruptions that may impact, among other things, our billing or clinical systems; the loss, compromise or corruption of data; systems outages; litigation or regulatory actions under privacy and security laws, all of which could have a material adverse effect on our business, results of operations, financial condition and cash flows, or materially harm our reputation.

Previous wording

The discussion below includes analysis of our financial condition and results of operations for the three months ended September 30, 2024 compared to the three months ended June 30, 2024, and the year-to-date periods for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Current wording

The discussion below includes analysis of our financial condition and results of operations for the three months ended March 31, 2025 compared to the three months ended December 31, 2024, and the year-to-date periods for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

Our U.S. dialysis treatment volume is directly correlated with our operating revenues and expenses. The increase in our U.S. dialysis treatments for the third quarter of 2024 from the second quarter of 2024 was primarily driven by one additional treatment day, partially offset by an increase in missed treatments and decreased patient count. The increase in our U.S. dialysis treatments for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 was primarily driven by one additional treatment day and increased treatments from acquired and non-acquired treatment growth.

Current wording

Our U.S. dialysis operating revenues and expenses are directly driven by treatment volume. The decrease in our U.S. dialysis treatments for the first quarter of 2025 from the fourth quarter of 2024 was primarily driven by a decrease in treatment days. The decrease in our U.S. dialysis treatments for the three months ended March 31, 2025 from the three months ended March 31, 2024 was primarily driven by a decrease in treatment days, as well as decreased average treatments per day related to increased missed treatments impacted by storms and the seasonal flu as well as increased mortality related to a more severe flu season.

Previous wording

U.S. dialysis average patient service revenue per treatment for the nine months ended September 30, 2024 increased compared to the nine months ended September 30, 2023 primarily driven by the increase in average reimbursement rates from normal annual rate increases including Medicare rate increases, as well as revenue cycle improvements, favorable changes in mix and an increase in hospital inpatient dialysis rates.

Current wording

U.S. dialysis average patient service revenue per treatment for the three months ended March 31, 2025 increased compared to the three months ended March 31, 2024 primarily driven by the incorporation of phosphate binders into the ESRD PPS bundle, as further described below, Medicare base rate and other annual rate increases, as well as an increase in hospital inpatient dialysis rates and favorable changes in mix, partially offset by other normal fluctuations.

Previous wording

Patient care costs. U.S. dialysis patient care costs per treatment for the third quarter of 2024 increased from the second quarter of 2024 primarily due to increased compensation expenses, including increased wage rates and payroll taxes. Patient care costs per treatment were also affected by increases in health benefit expense and other direct operating expenses associated with our dialysis centers, including seasonal increases in utilities expense, as well as increased minor equipment expense. These increases were partially offset by decreases in insurance costs and travel costs. Additionally, our fixed other direct operating expenses positively impacted patient care costs per treatment due to increased treatments in the third quarter of 2024. Patient care costs per treatment were also favorably impacted by decreased medical supplies expense, professional fees and center closure costs.

Current wording

Patient care costs. U.S. dialysis patient care costs per treatment for the first quarter of 2025 increased from the fourth quarter of 2024 primarily due to increases in pharmaceutical costs, principally due to the administration of phosphate binders, as described above, compensation expenses, including increased wage rates and seasonal increases in payroll taxes, as well as increased medical supplies expense, a gain recognized in the fourth quarter of 2024, and increases in contributions to charitable organizations. These increases were partially offset by decreases in health benefit expense, center closure costs, insurance costs, hurricane-related expenses incurred in the fourth quarter of 2024, routine maintenance costs and other direct operating expenses associated with our dialysis centers.

Previous wording

General and administrative expenses. U.S. dialysis general and administrative expenses in the third quarter of 2024 increased from the second quarter of 2024 primarily due to increased advocacy costs, compensation expenses, IT-related costs, travel costs and professional fees. These increases were partially offset by a decrease in center closure costs.

Current wording

General and administrative expenses. U.S. dialysis general and administrative expenses in the first quarter of 2025 decreased from the fourth quarter of 2024 primarily due to a decrease in professional fees and a gain recognized in the first quarter of 2025. Other drivers of this change include decreases in contract salaries, center closure costs, travel costs, health benefit expenses and advocacy costs. These decreases were partially offset by increased compensation expenses, including increased wage rates and seasonal increases in payroll taxes.

Previous wording

U.S. dialysis general and administrative expenses for the nine months ended September 30, 2024 increased from the nine months ended September 30, 2023 due to increased compensation expenses, including increased wage rate and headcount, as well as increases in advocacy costs, including a refund received in 2023 related to 2022 advocacy costs. Other drivers of this change include increases in IT-related costs, contract wages, center closure costs and professional fees. These increases were partially offset by decreased severance costs, as described above, and contributions to charitable organizations.

Current wording

U.S. dialysis general and administrative expenses for the three months ended March 31, 2025 increased from the three months ended March 31, 2024 due to increased IT-related expenses, compensation expenses, including increased wage rate and headcount, as well as increased long-term incentive compensation expense. These increases were partially offset by a gain recognized in the first quarter of 2025, and decreases in center closure costs and advocacy costs.

Previous wording

U.S. dialysis depreciation and amortization expenses for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 decreased primarily due to decreased accelerated depreciation related to center closures.

Current wording

U.S. dialysis depreciation and amortization expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 decreased primarily due to decreases in depreciation related to corporate IT projects and accelerated depreciation related to center closures.

Previous wording

Equity investment income. U.S. dialysis equity investment income for the third quarter of 2024 compared to the second quarter of 2024 increased due to increased profitability at certain nonconsolidated dialysis partnerships. Equity investment income for the nine months ended September 30, 2024 decreased compared to the nine months ended September 30, 2023 due to the consolidation of a previously nonconsolidated dialysis partnership in the first quarter of 2024, partially offset by increased profitability at certain nonconsolidated dialysis partnerships.

Current wording

Equity investment income. U.S. dialysis equity investment income for the first quarter of 2025 compared to the fourth quarter of 2024 decreased due to decreased profitability at certain nonconsolidated dialysis partnerships. Equity investment income for the three months ended March 31, 2025 was flat compared to the three months ended March 31, 2024.

Previous wording

U.S. dialysis operating income for the third quarter of 2024 compared to the second quarter of 2024 was negatively impacted by increased compensation expenses, health benefit expense and other direct operating expenses associated with our dialysis centers, including seasonal increases in utilities expense. Operating income was also negatively impacted by increased advocacy costs, center closure costs, as described above, IT-related costs and minor equipment expense. Operating income was positively impacted by increased average patient service revenue per treatment and dialysis treatments, as described above, as well as decreased insurance costs.

Current wording

U.S. dialysis operating income for the first quarter of 2025 compared to the fourth quarter of 2024 was negatively impacted by a decrease in dialysis treatments, as described above, increased pharmaceutical costs, compensation expense, medical supplies expense and contributions to charitable organizations. Operating income was positively impacted by decreased health benefit expenses, increased average patient service revenue per treatment, as described above, as well as decreases in other direct operating expenses associated with our dialysis centers, center closure costs and insurance costs. Operating income was also positively impacted by decreased routine maintenance costs, professional fees, hurricane-related expenses incurred in the fourth quarter of 2024, contract salaries and advocacy costs.

Previous wording

Our other operations include ancillary services that are primarily aligned with our core business of providing dialysis services to our network of patients. As of September 30, 2024, these consisted principally of our U.S. IKC business, certain U.S. other ancillary businesses (including our clinical research programs, transplant software business, and venture investment group), and our international operations.

Current wording

Our other operations include ancillary services that are primarily aligned with our core business of providing dialysis services to our network of patients. As of March 31, 2025, these consisted principally of our U.S. IKC business, certain U.S. other ancillary businesses (including our clinical research programs, transplant software business, and venture investment group), and our international operations. In the first quarter of 2025, we reallocated the revenues and costs associated with an internal software product from the U.S. IKC business to the U.S. other ancillary business. Prior periods have been recast to reflect this change.

Previous wording

As of September 30, 2024, DaVita IKC provided integrated care and disease management services to approximately 69,500 patients in risk-based integrated care arrangements and to an additional 13,900 patients in other integrated care arrangements. We also expect to add additional service offerings to our business and pursue additional strategic initiatives in the future as circumstances warrant, which could include, among other things, healthcare services not related to kidney disease.

Current wording

As of March 31, 2025, DaVita IKC provided integrated care and disease management services to approximately 62,100 patients in risk-based integrated care arrangements and to an additional 9,300 patients in other integrated care arrangements. We also expect to add additional service offerings to our business and pursue additional strategic initiatives in the future as circumstances warrant, which could include, among other things, healthcare services not related to kidney disease.

Previous wording

As of September 30, 2024, our international dialysis operations provided dialysis and administrative services through a total of 453 outpatient dialysis centers located in 13 countries outside of the United States.

Current wording

As of March 31, 2025, our international dialysis operations provided dialysis and administrative services through a total of 512 outpatient dialysis centers located in 13 countries outside of the United States.

Previous wording

(1)The reported operating income and adjusted operating income for the nine months ended September 30, 2024 and September 30, 2023 includes foreign currency (losses) gains embedded in equity method income recognized from our Asia Pacific joint venture (APAC JV) of approximately $(1.8) million and $1.0 million, respectively.

Current wording

(1)The reported operating income and adjusted operating income for the three months ended December 31, 2024 includes foreign currency gains embedded in equity method income recognized from our Asia Pacific (APAC) joint venture, which was consolidated in the fourth quarter of 2024, of approximately $2.4 million.

Previous wording

(1)The reported operating income and adjusted operating income for the three months ended September 30, 2024 and June 30, 2024 includes foreign currency (losses) gains embedded in equity method income recognized from our APAC JV of approximately $(3.7) million and $0.4 million, respectively.

Current wording

(1)The reported operating income and adjusted operating income for the three months ended March 31, 2024 includes foreign currency gains embedded in equity method income recognized from our APAC joint venture, which was consolidated in the fourth quarter of 2024, of approximately $1.5 million.

Previous wording

IKC revenues for the third quarter of 2024 decreased compared to the second quarter of 2024 due to a decrease in revenues related to the disposal of our physician services business, partially offset by an increase in revenues from our special needs plans and a net increase in shared savings. U.S. other ancillary revenues for the third quarter of 2024 remained relatively flat compared to the second quarter of 2024. International revenues for the third quarter of 2024 increased compared to the second quarter of 2024 due to acquired treatment growth.

Current wording

IKC revenues for the first quarter of 2025 decreased compared to the fourth quarter of 2024 due to a net decrease in shared savings, partially offset by an increase in revenues from our special needs plans. U.S. other ancillary revenues for the first quarter of 2025 remained relatively flat compared to the fourth quarter of 2024. International revenues for the first quarter of 2025 increased compared to the fourth quarter of 2024 due to acquired treatment growth, charges in the fourth quarter of 2024 for balances deemed uncollectible and average reimbursement rate increases in certain countries.

Previous wording

IKC revenues for the nine months ended September 30, 2024 decreased compared to the nine months ended September 30, 2023 due to decreased revenues from our special needs plans and the disposal of our physician services business, partially offset by a net increase in shared savings. U.S. other ancillary services revenues for the nine months ended September 30, 2024 remained relatively flat compared to the nine months ended September 30, 2023. Our international revenues for the nine months ended September 30, 2024 increased from the nine months ended September 30, 2023 due to acquired and non-acquired treatment growth and average reimbursement rate increases in certain countries.

Current wording

IKC revenues for the three months ended March 31, 2025 decreased compared to the three months ended March 31, 2024 due to the divestiture of our physician services business in 2024 and a net decrease in shared savings. U.S. other ancillary services revenues for the three months ended March 31, 2025 remained relatively flat compared to the three months ended March 31, 2024. Our international revenues for the three months ended March 31, 2025 increased from the three months ended March 31, 2024 due to acquired and non-acquired treatment growth, partially offset by the negative impact of fluctuations in foreign currency exchange rates in certain countries.

Previous wording

IKC operating loss for the third quarter of 2024 compared to the second quarter of 2024 decreased, primarily due to decreased medical costs and increased revenues related to our special needs plans, as well as the disposal of our physician services business. U.S. other ancillary services operating loss for the third quarter of 2024 was relatively flat compared to the second quarter of 2024. International operating income for the third quarter of 2024 increased from the second quarter of 2024 primarily due to increased revenues, as described above, partially offset by acquisition-related operating costs and decreased equity income resulting from fluctuations in foreign currency at our APAC JV.

Current wording

IKC operating loss for the first quarter of 2025 compared to IKC operating income for the fourth quarter of 2024 was driven by a net decrease in shared savings, partially offset by increased revenues and decreased medical costs related to our special needs plans, as well as decreased compensation expenses. U.S. other ancillary services operating loss for the first quarter of 2025 compared to the fourth quarter of 2024 decreased due to a reduction of the earn-out obligations related to our transplant software business. International operating income was impacted by a gain on a change in business ownership interests recognized in the fourth quarter of 2024, as described above. International operating income and adjusted operating income for the first quarter of 2025 compared to the fourth quarter of 2024 were impacted by increased revenues, as described above, partially offset by acquisition-related operating costs and decreased equity income resulting from fluctuations in foreign currency at our APAC joint venture, which was consolidated in the fourth quarter of 2024.

Previous wording

Debt expense for the third quarter of 2024 compared to the second quarter of 2024 increased primarily due to an increase in our weighted average effective interest rate principally related to the expiration of our 2019 interest rate cap agreements on June 30, 2024, which had lower rates than our currently effective interest rate caps. This change was also driven by an increase in our long-term debt balance related to the incremental borrowing on our Term Loan A-1 and issuance of 6.875% senior notes due 2032, partially offset by the repayment of our Term Loan B-1.

Current wording

Debt expense for the first quarter of 2025 compared to the fourth quarter of 2024 decreased primarily due to a decrease in our weighted average effective interest rate, partially offset by an increase in our weighted average outstanding credit facility balance. Debt expense for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 increased primarily due to an increase in our weighted average effective interest rate principally related to the expiration of our 2019 interest rate cap agreements on June 30, 2024, which had lower rates than our currently effective interest rate caps. This change was also driven by an increase in our long-term debt balance primarily related to the issuance in third quarter 2024 of 6.875% senior notes due 2032.

Previous wording

Other loss for the third quarter of 2024 decreased compared to the second quarter of 2024 primarily due to a decrease in equity investment losses at Mozarc Medical Holding LLC (Mozarc), increased interest income and decreased losses on foreign currency translation, partially offset by increased net losses on other investments. Other loss for the nine months ended September 30, 2024 increased compared to the nine months ended September 30, 2023, primarily driven by increased equity investment losses in Mozarc, including the $14 million gain recognized in the second quarter of 2023 on the non-cash assets contributed to Mozarc, partially offset by decreases in net losses on other investments and losses on foreign currency translation.

Current wording

Other loss for the first quarter of 2025 increased compared to the fourth quarter of 2024 primarily due to a decrease in interest income and increased net losses on investments, partially offset by decreased equity investment losses at Mozarc Medical Holding LLC (Mozarc). Other loss for the three months ended March 31, 2025 increased compared to the three months ended March 31, 2024, primarily driven by increased net losses on investments, partially offset by decreased equity investment losses at Mozarc and increased interest income.

Previous wording

The effective income tax rate and the effective income tax rate attributable to DaVita Inc. increased for the third quarter of 2024 compared to the second quarter of 2024 primarily due to an increase in nondeductible executive compensation.

Current wording

The effective income tax rate and the effective income tax rate attributable to DaVita Inc. increased for the first quarter of 2025 compared to the fourth quarter of 2024 primarily due to a tax benefit recognized in the fourth quarter for non-taxable non-cash gains related to previously nonconsolidated businesses and benefits recognized in the fourth quarter in connection with the release of reserves that expired under the statute of limitations.

Previous wording

The effective income tax rate and the effective income tax rate attributable to DaVita Inc. for the nine months ended September 30, 2024 increased compared to the nine months ended September 30, 2023 primarily due to one time benefits recognized in the connection with the closure of our federal IRS exam during 2023 and a larger benefit recognized for finalized tax returns in 2023 partially offset by a nontaxable noncash gain on change in ownership recognized in 2024.

Current wording

The effective income tax rate and the effective income tax rate attributable to DaVita Inc. for the three months ended March 31, 2025 increased compared to the three months ended March 31, 2024 primarily due to a tax benefit recognized in the first quarter of 2024 related to a nontaxable non-cash gain on changes in ownership interests and a decrease in benefits recognized in the first quarter of 2025 related to stock-based compensation.

Previous wording

The increase in net income attributable to noncontrolling interests for the third quarter of 2024 from the second quarter of 2024 and for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 was due to increased profitability at certain U.S. dialysis partnerships.

Current wording

The decrease in net income attributable to noncontrolling interests for the first quarter of 2025 from the fourth quarter of 2024 was due to decreased profitability at certain U.S. dialysis partnerships. The increase in net income attributable to noncontrolling interests for the three months ended March 31, 2025 from the three months ended March 31, 2024 was due to increased profitability at certain U.S. dialysis partnerships.

Previous wording

Our U.S. dialysis accounts receivable balances at September 30, 2024 and December 31, 2023 were $1.707 billion and $1.632 billion, respectively, representing approximately 54 days of revenue outstanding (DSO) for both periods. Our DSO calculation is based on the current quarter’s average revenues per day. There were no significant changes from the second quarter of 2024 to the third quarter of 2024 in the carrying amount of accounts receivable outstanding over one year old.

Current wording

Our U.S. dialysis accounts receivable balances at March 31, 2025 and December 31, 2024 were $1.722 billion and $1.615 billion, respectively, representing approximately 55 days and 52 days of revenue outstanding (DSO), respectively. The increase in DSO is primarily due to timing of collections. Our DSO calculation is based on the current quarter’s average revenues per day. There were no significant changes from the fourth quarter of 2024 to the first quarter of 2025 in the carrying amount of accounts receivable outstanding over one year old.

Previous wording

Free cash flow during the nine months ended September 30, 2024 decreased as compared to the nine months ended September 30, 2023 primarily due to a decrease in net cash provided by operating activities, as described above, and increased distributions to noncontrolling interests partially offset by a decrease in capital expenditures.

Current wording

Free cash flow during the three months ended March 31, 2025 increased as compared to the three months ended March 31, 2024 primarily due to an increase in net cash provided by operating activities, as described above, partially offset by increased distributions to noncontrolling interests and increases in capital expenditures.