XML 36 R20.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Long-Term Debt | 12 Months Ended
--- | ---
Dec. 31, 2023
Debt Disclosure [Abstract] |
Long-Term Debt | Long-term debt Long-term debt comprised the following:
| December 31, |  |  |  | As of December 31, 2023
| 2023 |  | 2022 |  | Maturity date |  | Interest rate |  | Estimated fair value(1)
Senior Secured Credit Facilities: |  |  |  |  |  |  |  |  |
Term Loan A-1 | $ | 1,234,375 |  |  | $ |  | (2) |  | SOFR+CSA+1.75% |  | $ | 1,209,688 |
Term Loan B-1 | 2,603,786 |  |  | 2,660,831 |  |  | 8/12/2026 |  | SOFR+CSA+1.75% |  | $ | 2,600,531 |
New Revolving line of credit | — |  |  |  |  | (2) |  | SOFR+CSA+1.75% |  | $ | — |
Prior Term Loan A | — |  |  | 1,498,438 |  |  | 8/12/2024 |  | (3) |  |
Prior Revolving line of credit | — |  |  | 165,000 |  |  | 8/12/2024 |  | (3) |  |
Senior Notes: |  |  |  |  |  |  |  |  |
4.625% Senior Notes | 2,750,000 |  |  | 2,750,000 |  |  | 6/1/2030 |  | 4.625 | % |  | $ | 2,416,563 |
3.75% Senior Notes | 1,500,000 |  |  | 1,500,000 |  |  | 2/15/2031 |  | 3.75 | % |  | $ | 1,235,625 |
Acquisition obligations and other notes payable(4) | 102,328 |  |  | 120,562 |  |  | 2024-2036 |  | 6.69 | % |  | $ | 102,328 |
Financing lease obligations(5) | 255,491 |  |  | 273,688 |  |  | 2024-2038 |  | 4.58 | % |  |
Total debt principal outstanding | 8,445,980 |  |  | 8,968,519 |  |  |  |  |  |  |
Discount, premium and deferred financing costs(6) | (54,347) |  |  | (44,498) |  |  |  |  |  |  |
| 8,391,633 |  |  | 8,924,021 |  |  |  |  |  |  |
Less current portion | (123,299) |  |  | (231,404) |  |  |  |  |  |  |
| $ | 8,268,334 |  |  | $ | 8,692,617 |  |  |  |  |  |  |
(1)For the Company's senior secured credit facilities, fair value estimates are based upon bid and ask quotes, a level 2 input. For our senior notes, fair value estimates are based on market level 1 inputs. For acquisition obligations and other notes payable, the carrying values presented here approximate their estimated fair values, based on estimates of their present values typically using level 2 interest rate inputs. (2)Outstanding Term Loan A-1 and the new Revolving line of credit balances are due on April 28, 2028, unless any of Term Loan B-1 remains outstanding 91 days prior to the Term Loan B-1 maturity date, in which case the outstanding Term Loan A-1 and the new Revolving line of credit balances become due at that 91 day date (May 13, 2026). (3)At March 31, 2023, the interest rate on the Company's then-existing credit facilities was LIBOR plus an interest rate margin in effect of 1.75% for the prior Term Loan A and prior revolving line of credit. (4)The interest rate presented for acquisition obligations and other notes payable is their weighted average interest rate based on the current fixed and variable interest rate components in effect as of December 31, 2023. (5)Financing lease obligations are measured at their approximate present values at inception. The interest rate presented is the weighted average discount rate embedded in financing leases outstanding. (6)As of December 31, 2023, the carrying amount of the Company's senior secured credit facilities have been reduced by a discount of $2,487 and deferred financing costs of $32,498 and the carrying amount of the Company's senior notes have been reduced by deferred financing costs of $31,491 and increased by a debt premium of $12,129. As of December 31, 2022, the carrying amount of the Company's senior secured credit facilities was reduced by a discount of $3,497 and deferred financing costs of $18,816, and the carrying amounts of the Company's senior notes were reduced by deferred financing costs of $36,203 and increased by a debt premium of $14,018. Scheduled maturities of long-term debt at December 31, 2023 were as follows:
2024 | $ | 123,299 |
2025 | $ | 132,878 |
2026 | $ | 2,663,669 |
2027 | $ | 116,712 |
2028 | $ | 1,017,856 |
Thereafter | $ | 4,391,566 |
Senior Secured Credit Facilities On April 3, 2023, the Company entered into the Second Amendment (the Second Amendment) to its senior secured credit agreement (the Credit Agreement). The Second Amendment modifies the Credit Agreement to, among other things, transition the interest pricing on Term Loan B-1 from LIBOR + 1.75% to a forward-looking term rate (Term SOFR) based on the Secured Overnight Financing Rate (SOFR) +1.75% plus an additional credit spread adjustment (CSA), provided that this adjusted rate shall never be less than 0.00%, as well as to update the successor interest rate provisions in the Credit Agreement with respect to Term Loan B-1. As of December 31, 2023, the CSA for all tranches outstanding on the Company's Term Loan B-1 was 0.11%. The Company adopted Accounting Standards Update (ASU) No. 2020-04 and ASU No. 2022-06 regarding reference rate reform during the second quarter and applied one of their practical expedients to treat the amendment of Term Loan B-1 as a non-substantial modification. On April 28, 2023, the Company entered into the Third Amendment (the Third Amendment, and together with the Second Amendment, the Amendments) to the Credit Agreement. The Third Amendment modifies the Credit Agreement to, among other things, refinance its Term Loan A and revolving line of credit with a secured Term Loan A-1 facility in the aggregate principal amount of $1,250,000 and a secured revolving line of credit in the aggregate principal amount of up to $1,500,000 (the foregoing referred to as the new Term Loan A-1 and new revolving line of credit, respectively). The new Term Loan A-1 and new revolving line of credit initially bore interest at Term SOFR, plus a CSA of 0.10% and an interest rate margin of 2.00%, which was subject to adjustment depending upon the Company's leverage ratio under the Credit Agreement, as amended, and which can range from 1.25% to 2.25%, provided that this adjusted rate shall never be less than 0.00%. The new Term Loan A-1 requires amortizing quarterly principal payments that began on September 30, 2023 of $7,813 per quarter for the first four payments, $15,625 per quarter for the fifth through sixteenth payments, $23,438 per quarter for the seventeenth through nineteenth payments, with the balance due on April 28, 2028. The new revolving line of credit has a five-year term. However, under the Third Amendment, Term Loan A-1 and the new revolving line of credit become due if any of Term Loan B-1 remains outstanding 91 days prior to the Term Loan B-1 maturity date, in which case the Term Loan A-1 balance and any outstanding balance on the new revolving line of credit become due at that 91 day date (May 13, 2026). Borrowings under the Company's senior secured credit facilities are guaranteed and secured by substantially all of DaVita Inc.'s and certain of the Company’s domestic subsidiaries' assets and rank senior to all unsecured indebtedness. Borrowings under the new Term Loan A-1, Term Loan B-1 and new revolving line of credit rank equal in priority for that security and related subsidiary guarantees under the facility's terms. The Credit Agreement, as amended, contains certain customary affirmative and negative covenants such as various restrictions or limitations on permitted amounts of investments (including acquisitions), share repurchases, payment of dividends, and redemptions and incurrence of other indebtedness. Many of these restrictions and limitations will not apply as long as the Company’s leverage ratio calculated in accordance with the Amendments is below 4.00:1.00. In addition, the Amendments require compliance with a maximum leverage ratio covenant, tested quarterly, of 5.00:1.00 through June 30, 2026 and 4.50:1.00 thereafter. In the second quarter of 2023, the Company used a portion of the proceeds from the new Term Loan A-1 and initial borrowing of $400,000 on the new revolving line of credit to pay off the remaining principal balance outstanding and accrued interest and fees on its prior Term Loan A and prior revolving line of credit in the amount of $1,602,199. The remaining borrowings added cash to the balance sheet for general corporate purposes. In addition to the prepayments described above, during 2023, the Company made regularly scheduled and other principal payments under its senior secured credit facilities totaling $54,010 on its prior Term Loan A, $15,625 on Term Loan A-1 and $57,046 on Term Loan B-1. As a result of the transactions described above, the Company recognized debt prepayment and refinancing charges of $7,962 in the second quarter of 2023 composed partially of fees incurred for these transactions and partially of deferred financing costs written off for the portion of debt considered extinguished and reborrowed as a result of the repayment of all principal balances outstanding on the Company's prior Term Loan A and prior revolving line of credit. For the portion of the debt that was considered extinguished and reborrowed, the Company recognized constructive financing cash outflows and financing cash inflows on the statement of cash flows of $434,393 and $150,000 for the Term Loan A and prior revolving line of credit, respectively, even though no funds were actually paid or received. Another $715,019 of the debt considered extinguished in this refinancing represented a non-cash financing activity. As of December 31, 2023, the Company had undrawn capacity on the revolving line of credit under its senior secured credit facilities of $1,500,000. 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 December 31, 2023. The Company also had letters of credit of approximately $151,403 outstanding under a separate bilateral secured letter of credit facility as of December 31, 2023. As of December 31, 2023, the Company's 2019 interest rate cap agreements described below had the economic effect of capping the Company's maximum exposure to SOFR variable interest rate changes on equivalent amounts of the Company's floating rate debt, including all of Term Loan B-1 and a portion of Term Loan A-1. The remaining $338,161 outstanding principal balance of Term Loan A-1 is subject to SOFR-based interest rate volatility. These cap agreements are designated as cash flow hedges and, as a result, changes in their fair values are reported in other comprehensive income. The original premiums paid for the caps are amortized to debt expense on a straight-line basis over the term of each cap agreement starting from its effective date. These cap agreements do not contain credit risk-contingent features. Senior Notes The Senior Notes are unsecured obligations, rank equally in right of payment with the Company’s existing and future unsecured senior indebtedness and require semi-annual interest payments. The Company may redeem some or all of the Senior Notes at any time on or after certain specific dates and at certain specific redemption prices as outlined in each senior note agreement. Interest rates on the Senior Notes are fixed by their terms. Interest rate cap agreements During 2023 the Company entered into several forward interest rate cap agreements, described below, that have the economic effect of capping the Company's exposure to SOFR variable interest rate changes on specific portions of the Company's floating rate debt (2023 cap agreements). These 2023 cap agreements are designated as cash flow hedges and, as a result, changes in their fair values will be reported in other comprehensive income. These 2023 cap agreements have notional amounts that amortize downward over time, do not contain credit-risk contingent features, and become effective and expire as described in the table below. Additionally, during and as of the end of the second quarter of 2023, the Company transitioned the variable rate base on its senior secured credit facilities and related hedging interest rate caps from LIBOR to SOFR. This transition involved a SOFR-to-LIBOR rate mismatch between this debt and the 2019 interest rate caps for a portion of the second quarter of 2023, but the Company’s interest rate hedges remained highly effective throughout the transition and thereafter. This transition was accomplished through the Amendments to the Credit Agreement for the Company's senior secured credit facility debt and, for the Company's 2019 interest rate caps outstanding, through the International Swaps and Derivatives Association (ISDA)'s Interbank Offered Rate (IBOR) Fallbacks Supplement and IBOR Fallbacks Protocol which were established in anticipation of the cessation of LIBOR. That ISDA protocol incorporated fallbacks for derivatives linked to LIBOR which facilitated their transition to a replacement reference rate. The Company has adhered to this ISDA protocol and as of June 30, 2023 transitioned all of its LIBOR-based derivative exposure to SOFR. The following table summarizes the Company’s interest rate cap agreements outstanding as of December 31, 2023:
|  |  |  |  |  |  |  | Notional reduction or contractual maturity date At December 31 unless noted
Year cap agreements executed |  | Notional amount |  | SOFR maximum rate |  | Approximate effective date |
|  |  |  | 2024(1) |  | 2025 |  | 2026
2019 |  | $ | 3,500,000 |  |  | 2.00% |  | 6/30/2020 |  | $ | 3,500,000 |  |  |  |  |
2023 |  | $ | 1,000,000 |  |  | 3.75% |  | 6/30/2024 |  | $ | 500,000 |  |  | $ | 500,000 |  |  |
2023 |  | $ | 1,000,000 |  |  | 4.00%(2) |  | 6/30/2024 |  | $ | 250,000 |  |  | $ | 750,000 |  |  |
2023 |  | $ | 1,000,000 |  |  | 4.75%(3) |  | 6/30/2024 |  | $ | 250,000 |  |  | $ | 750,000 |  |  |
2023 |  | $ | 500,000 |  |  | 5.00%(4) |  | 6/30/2024 |  |  |  |  |  | $ | 500,000 |
2023 |  | $ | 250,000 |  |  | 4.50% |  | 12/31/2024 |  |  |  | $ | 250,000 |  |  |
2023 |  | $ | 750,000 |  |  | 4.00% |  | 12/31/2024 |  |  |  | $ | 250,000 |  |  | $ | 500,000 |
(1)The Company's 2019 cap agreements mature on June 30, 2024. (2)Effective January 1, 2025, the maximum rate of 4.00% decreases to 3.75% for these interest rate caps. (3)Effective January 1, 2025, the maximum rate of 4.75% decreases to 4.00% for these interest rate caps. (4)Effective January 1, 2025, the maximum rate of 5.00% decreases to 4.50% for these interest rate caps. The following table summarizes the effects of the Company’s interest rate cap agreements for the years ended December 31, 2023, 2022 and 2021:
|  | Amount of unrealized gains (losses) in OCI on interest rate cap agreements |  | Location in Consolidated Statements of Income |  | Reclassification from accumulated other comprehensive income into net income
|  | Year ended December 31, |  |  | Year ended December 31,
Derivatives designated as cash flow hedges |  | 2023 |  | 2022 |  | 2021 |  |  | 2023 |  | 2022 |  | 2021
Interest rate cap agreements |  | $ | 9,186 |  |  | $ | 144,793 |  |  | $ | 9,532 |  |  | Debt expense |  | $ | (103,567) |  |  | $ | (11,732) |  |  | $ | 5,509 |
Related income tax |  | (2,291) |  |  | (36,124) |  |  | (2,377) |  |  | Related income tax |  | 25,840 |  |  | 2,926 |  |  | (1,376) |
Total |  | $ | 6,895 |  |  | $ | 108,669 |  |  | $ | 7,155 |  |  |  |  | $ | (77,727) |  |  | $ | (8,806) |  |  | $ | 4,133 |
The fair value of the Company's interest rate cap agreements, which are classified in other long-term assets on its consolidated balance sheet, were $79,805 and $139,755 for the years ended December 31, 2023 and December 31, 2022, respectively. See Note 19 for further details on amounts recorded and reclassified from accumulated other comprehensive (loss) income and recorded as debt expense (offset) related to the Company’s interest rate cap agreements for the year ended December 31, 2023. As a result of the variable rate cap from the Company's 2019 interest rate cap agreements, the Company’s weighted average effective interest rate on its senior secured credit facilities at the end of December 31, 2023 was 4.39%, based on the current margins in effect for its senior secured credit facilities as of December 31, 2023, as detailed in the table above. The Company’s weighted average effective interest rate on all debt, including the effect of interest rate caps and amortization of debt discount, was 4.52% for the year ended December 31, 2023 and 4.42% as of December 31, 2023. As of December 31, 2023, the Company’s interest rates were fixed and economically fixed on approximately 54% and 96% of its total debt, respectively. Debt expense Debt expense consisted of interest expense of $373,951, $339,247 and $267,049 and the amortization and accretion of debt discounts and premiums, amortization of deferred financing costs, costs for the undrawn portion of the revolving line of credit and the amortization of interest rate cap agreements of $24,600, $17,772 and $18,205 for 2023, 2022 and 2021, respectively. These interest expense amounts are net of capitalized interest.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration