Q - DAVITA

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, 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…

Excerpt shortened here; the source contains the full paragraph.

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, the potential impact of the One Big Beautiful Bill Act (OBBBA) on our business, including with respect to federal funding of Medicaid and other government programs, 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, including potential impacts to such mix as a result of OBBBA, 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 uncerta…

Excerpt shortened here; the source contains the full paragraph.

Previous 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;

Current wording

•risks arising from potential changes in or new laws, regulations or requirements applicable to us, including, without limitation, OBBBA and 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

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.

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 chronic kidney disease (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 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.

Current wording

In the second quarter of 2025, treatment per day volumes increased compared to the first quarter. For the full year to date, we have experienced a negative impact on revenue and treatment volume due to, among other things, the cybersecurity incident described below, an elevated number of missed treatments and a particularly severe flu season. 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

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..."

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. We expect certain increased staffing and labor costs to continue, due to, among other factors, the continuation of inflationary conditions. The cumulative impact of any increased staffing, labor, and supply costs and other expenses could be material. However, during the quarter we saw improvements in certain labor related costs such as training and productivity, and we expect to continue to see improvements in labor-related costs due to, among other things, reduced turnover. Our industry has also experienced increased union organizing activities. For example, union petitions have been filed in ten of our clinics in California and nine 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 are aware of the exfiltration of certain data as part of the cybersecurity incident. We are in the process of validating the extent and nature of the files that were involved, including the identification of Personally Identifiable Information (PII) and/or Protected Health Information (PHI) involved. Based on our review, we will comply with applicable privacy notice provisions and regulations. We have incurred, and expect to continue to incur, expenses in connection with the investigation and remediation activities related to this incident, including in connection with litigation that has been filed or may in the future be filed related to the incident, but at this time we are unable to predict the extent of other potential liabilities or consequences that may arise from this incident.

Current wording

We have incurred, and expect to continue to incur, expenses in connection with the investigation and remediation activities related to this incident, including in connection with litigation that has been filed or may in the future be filed related to the incident as well as any potential regulatory investigations. In addition, it is possible that future risks and uncertainties resulting from the incident, including risks related to impacted data, litigation, reputational harm, and regulatory actions could adversely affect our business, results of operations, financial condition and cash flows. At this time we are unable to predict the extent of these and other potential liabilities or consequences that may arise from this incident.

Previous wording

Based on information currently available and the investigation to date, we believe that this incident has not had, and is not expected to have, a material adverse impact on our ability to provide patient care or on our business, results of operations or financial condition. However, our investigation remains ongoing and as a result, we do not yet know the full impact of thecybersecurity incident, including how much of the financial impact will be covered by insurance.

Current wording

The cybersecurity incident had an adverse impact on our billing and revenue collection cycles as well as our patient census. We expect these impacts will in turn have an adverse impact on our revenue per treatment and treatment volumes for the full year. Based on information currently available, we believe that this incident has not had, and is not expected to have, a material adverse impact on our business, results of operations or financial condition. However, we do not yet know the full impact of thecybersecurity incident, including how much of the financial impact will be covered by insurance.

Previous 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.

Current wording

The discussion below includes analysis of our financial condition and results of operations for the three months ended June 30, 2025 compared to the three months ended March 31, 2025, and the year-to-date periods for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Previous 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.

Current wording

Our U.S. dialysis operating revenues and expenses are directly driven by treatment volume. The increase in our U.S. dialysis treatments for the second quarter of 2025 from the first quarter of 2025 was primarily driven by an increase in treatment days. The decrease in our U.S. dialysis treatments for the six months ended June 30, 2025 from the six months ended June 30, 2024 was primarily driven by a decrease in average treatments per day due to higher mortality and missed treatments from a more severe flu season, as well as fewer treatment days.

Previous wording

U.S. dialysis average patient service revenue per treatment for the first quarter of 2025 compared to the fourth quarter of 2024 increased primarily due to the incorporation of phosphate binders into the ESRD Prospective Payment System (ESRD PPS) bundle, as further described below, Medicare base rate and other annual rate increases, favorable changes in mix, including seasonal increases in hospital inpatient dialysis treatments, partially offset by a seasonal decline from co-insurance and deductibles, and other normal fluctuations.

Current wording

U.S. dialysis average patient service revenue per treatment for the second quarter of 2025 compared to the first quarter of 2025 increased primarily due to normal seasonal improvements including patients meeting their co-insurance and deductibles, and other normal fluctuations. These increases were partially offset by a decline in volume of phosphate binders.

Previous 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.

Current wording

U.S. dialysis average patient service revenue per treatment for the six months ended June 30, 2025 increased compared to the six months ended June 30, 2024 primarily driven by the incorporation of phosphate binders into the ESRD Prospective Payment System (ESRD PPS) bundle, as further described below, Medicare base rate and other annual rate increases, revenue cycle improvements, and other normal fluctuations.

Previous wording

On January 1, 2025, phosphate binders, a drug class taken orally by many ESKD patients to reduce absorption of dietary phosphate, were incorporated into the ESRD PPS bundled payment. Phosphate binders are not included in the ESRD PPS base rate at this time and are reimbursed through a Transitional Drug Add-on Payment Adjustment (TDAPA). During the TDAPA period, Medicare payment for phosphate binders are based on the average sales price increased by a fixed monthly amount of $36.41 for incremental operational costs. The TDAPA period is expected to continue for a period of at least two years.

Current wording

On January 1, 2025, phosphate binders, a drug class taken orally by many ESKD patients to reduce absorption of dietary phosphate, were incorporated into the ESRD PPS bundled payment. Phosphate binders are not included in the ESRD PPS base rate at this time and are reimbursed through a Transitional Drug Add-on Payment Adjustment (TDAPA). During the TDAPA period, Medicare payments for phosphate binders are based on the average sales price increased by a fixed monthly amount of $36.41 for incremental operational costs. The TDAPA period is expected to continue for a period of at least two years.

Previous 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.

Current wording

Patient care costs. U.S. dialysis patient care costs per treatment for the second quarter of 2025 decreased from the first quarter of 2025 primarily due to decreased compensation expense, including increased productivity levels at our dialysis centers and seasonal decreases in payroll taxes, as well as decreases in pharmaceutical costs, principally due to volume of phosphate binders, and travel costs. These decreases were partially offset by increases in health benefit expense and insurance costs.

Previous wording

U.S. dialysis patient care costs per treatment for the three months ended March 31, 2025 increased from the three months ended March 31, 2024 primarily due to increases in pharmaceutical costs, principally due to the administration of phosphate binders, as described above, and compensation expenses, including increased wage rate, as well as increases in medical supplies expense, other direct operating expenses associated with our dialysis centers and health benefit expense. Other drivers of this change include increases in contributions to charitable organizations, center closure costs and travel costs.

Current wording

U.S. dialysis patient care costs per treatment for the six months ended June 30, 2025 increased from the six months ended June 30, 2024 primarily due to increases in pharmaceutical costs, principally due to the administration of phosphate binders, as described above, and compensation expenses, including increased wage rates. Patient care costs per treatment were also affected by increases in other direct operating expenses associated with our dialysis centers, health benefit expense and medical supplies expense.

Previous 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.

Current wording

General and administrative expenses. U.S. dialysis general and administrative expenses in the second quarter of 2025 increased from the first quarter of 2025 primarily due to costs related to the cybersecurity incident, as described above, a gain recognized in the first quarter of 2025 and increased compensation expense, including increased wage rates.

Previous 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.

Current wording

U.S. dialysis general and administrative expenses for the six months ended June 30, 2025 increased from the six months ended June 30, 2024 due to increases in compensation expenses, including increased wage rates and headcount, IT-related costs, and costs related to the cybersecurity incident, as described above. These increases were partially offset by decreased center closure costs.

Previous wording

Depreciation and amortization. Depreciation and amortization expense is directly impacted by the number of our dialysis centers and the information technology that we develop and acquire as well as changes in useful lives of assets. U.S. dialysis depreciation and amortization expenses in the first quarter of 2025 were relatively flat compared to the fourth quarter of 2024.

Current wording

Depreciation and amortization. Depreciation and amortization expense is directly impacted by the number of our dialysis centers and the information technology that we develop and acquire. U.S. dialysis depreciation and amortization expenses in the second quarter of 2025 were flat compared to the first quarter of 2025.

Previous 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.

Current wording

U.S. dialysis depreciation and amortization expenses for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 decreased primarily due to decreases in corporate IT projects, depreciation related to leasehold improvements due to the reduction in number of centers operated, and accelerated depreciation related to center closures. These decreases were partially offset by an increase in dialysis equipment expenses.

Previous 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.

Current wording

Equity investment income. U.S. dialysis equity investment income for the second quarter of 2025 compared to the first quarter of 2025 increased due to increased profitability at certain nonconsolidated dialysis partnerships. Equity investment income for the six months ended June 30, 2025 was flat compared to the six months ended June 30, 2024.

Previous 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.

Current wording

As of June 30, 2025, DaVita IKC provided integrated care and disease management services to approximately 64,400 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 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.

Current wording

As of June 30, 2025, our international dialysis operations provided dialysis and administrative services through a total of 513 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 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.

Current wording

(1)The reported operating income for the six months ended June 30, 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 $1.9 million.

Previous wording

IKC operating loss for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 increased, primarily due to a net decrease in shared savings, partially offset by the divestiture of our physician services business in 2024. Other U.S. ancillary services operating loss for the three months ended March 31, 2025 decreased compared to the three months ended March 31, 2024 primarily due to a reduction of the earn-out obligations in our transplant software business.

Current wording

U.S. other ancillary services operating loss for the second quarter of 2025 compared to the first quarter of 2025 and for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was impacted by a reduction of the earn-out obligations related to our transplant software business in the first quarter of 2025.

Previous wording

Corporate administrative support expenses for the first quarter of 2025 compared to the fourth quarter of 2024 and for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 increased primarily due to increased long-term incentive compensation expense and professional fees.

Current wording

Corporate administrative support expenses for the second quarter of 2025 compared to the first quarter of 2025 and for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 increased primarily due to increased long-term incentive compensation and professional fees.

Previous 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.

Current wording

Debt expense for the second quarter of 2025 compared to the first quarter of 2025 increased due to an increase in our long-term debt balance primarily related to the second quarter 2025 issuance of the 6.75% senior notes due 2033 (the 6.75% Senior Notes) and an increase in our weighted average effective interest rate. Debt expense for the six months ended June 30, 2025 compared to the six months ended June 30, 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 second quarter 2025 issuance of the 6.75% Senior Notes and third quarter 2024 issuance of 6.875% senior notes due 2032.

Previous 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.

Current wording

Other loss for the second quarter of 2025 increased compared to the first quarter of 2025 primarily due to increased equity investment losses at Mozarc Medical Holding LLC (Mozarc) and decreased interest income, partially offset by decreased net losses on other investments. Other loss for the six months ended June 30, 2025 remained relatively flat compared to the six months ended June 30, 2024, primarily driven by increased net losses on investments, 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 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.

Current wording

The effective income tax rate and the effective income tax rate attributable to DaVita Inc. increased for the second quarter of 2025 compared to the first quarter of 2025 primarily due to a write down of a 2014 tax refund claim and benefits recognized in the first quarter of 2025 from stock-based compensation, partially offset by tax benefits related to renewable energy credits purchased in the second quarter.

Previous 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.

Current wording

The effective income tax rate and the effective income tax rate attributable to DaVita Inc. for the six months ended June 30, 2025 increased compared to the six months ended June 30, 2024 primarily due to a write down of a 2014 tax refund claim and a decrease in tax benefits recognized in 2025 related to stock-based compensation and a benefit recognized in 2024 related to a non-taxable non-cash consolidation gain.

Previous 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.

Current wording

The increase in net income attributable to noncontrolling interests for the second quarter of 2025 from the first quarter of 2025 and for the six months ended June 30, 2025 from the six months ended June 30, 2024 was due to increased profitability at certain U.S. dialysis partnerships.

Previous 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.

Current wording

Our U.S. dialysis accounts receivable balances at June 30, 2025 and December 31, 2024 were $1.838 billion and $1.615 billion, respectively, representing approximately 58 days and 52 days of revenue outstanding (DSO), respectively. The increase in DSO is primarily due to timing of collections, which was driven in part by the disruption to billing and collection systems during the second quarter as a result of the cybersecurity incident. Our DSO calculation is based on the current quarter’s average revenues per day. There were no significant changes from the first quarter of 2025 to the second quarter of 2025 in the carrying amount of accounts receivable outstanding over one year old.

Previous 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.

Current wording

Free cash flow during the six months ended June 30, 2025 decreased as compared to the six months ended June 30, 2024 primarily due to a decrease in net cash provided by operating activities, as described above, increased distributions to noncontrolling interests and increases in capital expenditures.

Previous wording

Significant sources of cash during the period included net draws on our revolving line of credit of $425 million. Significant uses of cash during the three months ended March 31, 2025 included the repayment of $93 million in interest-free funding made available by UnitedHealth Group and its affiliates following the cybersecurity breach that affected CHC during the first quarter of 2024, regularly scheduled principal payments under our senior secured credit facilities totaling approximately $30 million on our Term Loan A-1 and $4 million on Term Loan B-1, and additional required payments under other debt arrangements. In addition, during the three months ended March 31, 2025 we used cash to repurchase 3.7 million shares of our common stock.

Current wording

Significant sources of cash during the period included the issuance of the 6.75% Senior Notes in the amount of $1,000 million. Significant uses of cash during the six months ended June 30, 2025 included the repayment of $93 million in interest-free funding made available by UnitedHealth Group and its affiliates following the cybersecurity breach that affected Change Healthcare (CHC), a subsidiary of UnitedHealth Group, during the first quarter of 2024, regularly scheduled principal payments under our senior secured credit facilities totaling approximately $59 million on our Term Loan A-1 and $8 million on Term Loan B-1, and additional required payments under other debt arrangements. Additionally, we recognized financing cash outflows of $12 million in deferred financing costs related to the 6.75% Senior Notes transaction, as well as $13 million in cap premium fees for our 2025 forward interest rate cap agreements. In addition, during the six months ended June 30, 2025 we used cash to repurchase 6.7 million shares of our common stock.

Previous wording

By comparison, the same period in 2024 included net draws on our revolving line of credit of $765 million. Significant uses of cash in that period included regularly scheduled principal payments under our senior secured credit facilities totaling approximately $8 million on Term Loan A-1 and $7 million on Term Loan B-1, as well as additional required payments under other debt arrangements.

Current wording

By comparison, the same period in 2024 included the extension of the maturity date from August 2026 to May 2031 for a portion of our Term Loan B-1 (the Extended Term Loan B-1 transaction) in the aggregate principal amount of approximately $1,640 million, $393 million, net, of interest-free funding made available by UnitedHealth Group and its affiliates following the cybersecurity breach that affected CHC during the first quarter of 2024 and a net draw of $260 million on our revolving line of credit in the six months ended June 30, 2024. Significant uses of cash during that same period included debt prepayments on Term Loan B-1 of $1,640 million as part of the Extended Term Loan B-1 transaction, and regularly scheduled principal payments under our senior secured credit facilities totaling approximately $16 million on our Term Loan A-1 and $14 million on Term Loan B-1, as well as additional required payments under other debt arrangements. Additionally, we recognized financing cash outflows of $13 million in deferred financing costs and discount related to the Fourth Amendment to the Senior Secured Credit Agreement Extended Term Loan B-1 transaction and $7 million in cap premium fees for our 2024 forward interest cap agreements.

Previous wording

The following table summarizes our common stock repurchases during the three months ended March 31, 2025 and March 31, 2024:

Current wording

The following table summarizes our common stock repurchases during the three and six months ended June 30, 2025 and 2024:

Previous wording

(3)Includes share repurchases from Berkshire Hathaway Inc. pursuant to our previously disclosed share repurchase agreement. See further information regarding these share repurchases in Note 8 to the condensed consolidated financial statements.

Current wording

(1)Includes share repurchases from Berkshire Hathaway Inc. pursuant to our previously disclosed share repurchase agreement. See further information regarding these share repurchases in Note 8 to the condensed consolidated financial statements.

Previous wording

(1)Includes commissions and the 1% excise tax imposed on certain share repurchases by the Inflation Reduction Act of 2022. The excise tax is recorded as part of the cost basis of treasury shares repurchased and, as such, is included in stockholders’ equity.

Current wording

(2)Includes commissions and excise tax. The excise tax is recorded as part of the cost basis of treasury shares repurchased and, as such, is included in stockholders’ equity.

Previous wording

As of March 31, 2025, we had $1,075 million available and $425 million drawn on our $1.5 billion revolving line of credit under our senior secured credit facilities. Credit available under this revolving line of credit is reduced by the amount of any letters of credit outstanding thereunder, of which there were none as of March 31, 2025. We separately had approximately $173 million in letters of credit outstanding under a separate bilateral secured letter of credit facility.

Current wording

As of June 30, 2025, we had undrawn capacity on the revolving line of credit under our senior secured credit facilities of $1.5 billion. Credit available under this revolving line of credit is reduced by the amount of any letters of credit outstanding thereunder, of which there were none as of June 30, 2025. We separately had approximately $159 million in letters of credit outstanding under a separate bilateral secured letter of credit facility.

Previous wording

(1)Represents non-cash gains recognized on the acquisitions of controlling financial interests in previously nonconsolidated partnerships in 2024. See additional discussion above under the heading "Gain on changes in ownership interests" within "U.S. dialysis results of operations" and "Ancillary services results of operations" for the $35 million and $74 million, respectively. These gains were to mark our prior investments in these businesses to fair value before consolidation and to recognize related foreign currency gains from translation adjustments previously deferred in accumulated other comprehensive loss. Gains on changes in business ownership interests do not represent a normal and recurring requirement of operating our business or generating revenues and may obscure analysis of underlying trends and financial performance.

Current wording

(2)Represents a non-cash gain recognized on the acquisition of a controlling financial interest in a previously nonconsolidated dialysis partnership. See additional discussion above under the heading "Gain on changes in ownership interests" within "U.S. dialysis results of operations". This gain to mark the prior investment in the business to fair value before consolidation does not represent a normal and recurring requirement of operating our business or generating revenues and may obscure analysis of underlying trends and financial performance.

Previous wording

As of March 31, 2025, we have outstanding letters of credit in the aggregate amount of approximately $173 million under a bilateral secured letter of credit facility separate from our senior secured credit facilities.

Current wording

As of June 30, 2025, we have outstanding letters of credit in the aggregate amount of approximately $159 million under a bilateral secured letter of credit facility separate from our senior secured credit facilities.

Previous wording

On March 5, 2024, we entered into four separate purchase agreements with Fresenius Medical Care AG and its affiliates to acquire their dialysis service operations in Chile, Ecuador, Colombia and Brazil. The Chile, Ecuador and Colombia transactions closed during 2024. The Brazil transaction is expected to close mid-year 2025 and remains subject to customary closing conditions and regulatory approval. The expected cash payment for this remaining transaction is approximately $100 million, subject to certain customary adjustments.

Current wording

On March 5, 2024, we entered into four separate purchase agreements with Fresenius Medical Care AG and its affiliates to acquire their dialysis service operations in Chile, Ecuador, Colombia and Brazil. The Chile, Ecuador and Colombia transactions closed during 2024. The Brazil transaction closed effective August 1, 2025, as described further in Note 14 to the condensed consolidated financial statements.