DaVita (DVA) 10-K risk factor changes: FY2020 vs FY2019

*This Annual Report on Form 10-K contains [removed: statements that are] forward-looking statements within the meaning of the federal securities laws.

[removed: In addition, please] [added: Please] read the cautionary notice regarding forward-looking statements in Item 7 of Part II of this Annual Report on Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.”*][added: Operations.” These forward-looking statements involve risks and uncertainties, including those discussed below, which could have a material adverse effect on our business, cash flows, financial condition, results of operations and/or reputation.]

[removed: If we fail to adhere to all of the complex governmental laws, regulations and requirements that apply to] [added: If] our [removed: business,] [added: joint ventures are found to violate applicable laws or regulations,] we could suffer severe consequences that [removed: could] [added: would] have a material adverse effect on our business, results of operations, financial condition and cash [removed: flows,] [added: flows] and could materially harm our [removed: reputation and stock price.][added: reputation.]

We operate in a complex regulatory environment with an extensive and evolving set of federal, state and local governmental laws, regulations and [removed: requirements.][added: other requirements that apply to us.]

These laws, regulations and [added: other] requirements are promulgated and overseen by a number of different legislative, [removed: administrative,] regulatory, [added: administrative,] and quasi-regulatory bodies, each of which may have varying interpretations, judgments or related guidance.

Laws, regulations and [added: other] requirements that apply to or impact our business include, but are not limited to:

[removed: | • |] [added: -] Medicare and Medicaid reimbursement statutes, rules and regulations (including, but not limited to, manual provisions, local coverage determinations, national coverage determinations, payment schedules and agency guidance); [removed: |]

[removed: | • |] [added: -] the 21st Century Cures [removed: Act; |][added: Act (the Cures Act);]

[removed: | • |] [added: -] Federal Acquisition Regulations; [removed: |]

[removed: | • |] [added: -] the Foreign Corrupt Practices Act (FCPA); [removed: |]

[removed: | • |] [added: -] Medicare and Medicaid provider requirements, including requirements associated with providing and updating certain information about the Medicare or Medicaid entity, as applicable, and its direct and indirect affiliates; [removed: |]

[removed: | • |] [added: -] antitrust and competition laws and regulations; [removed: and |]

[removed: | • |] [added: -] federal and state laws regarding the collection, use and disclosure of patient health information (e.g., Health Insurance Portability and Accountability Act of 1996 (HIPAA)) and the storage, handling, shipment, disposal and/or dispensing of pharmaceuticals and blood products and other biological materials. [removed: |]

Any future penalties, sanctions or other consequences [removed: under the CIA or otherwise] [added: imposed on us] could be more severe in [added: certain] circumstances [removed: in which] [added: if the] OIG or a similar regulatory authority determines that we [removed: have] [added: knowingly and] repeatedly failed to comply with applicable laws, regulations or [removed: requirements.][added: other requirements, and could adversely impact our results of operations or financial condition or could have a negative impact on our reputation.]

[removed: | • |] [added: -] Loss of required certifications or suspension or exclusion from or termination of our participation in government [removed: payment programs; |][added: programs (including, without limitation, Medicare, Medicaid and Center for Medicare and Medicaid Innovation (CMMI) demonstration programs);]

[removed: | • |] [added: -] Refunds of amounts received in violation of law or applicable payment program requirements dating back to the applicable statute of limitation periods; [removed: |]

[removed: | • |] [added: -] Loss of licenses required to operate healthcare facilities or administer pharmaceuticals in the states in which we operate; [removed: |]

[removed: | • |] [added: -] Reductions in payment rates or coverage for dialysis and ancillary services and pharmaceuticals; [removed: |]

[removed: | • |] [added: -] Criminal or civil liability, fines, damages or monetary penalties, which could be [removed: material; |][added: material and/or could materially harm our reputation or stock price;]

[removed: | • |] [added: -] Enforcement actions, investigations, or audits by governmental agencies and/or state law claims for monetary damages by patients who believe their protected health information (PHI) has been used, disclosed or not properly safeguarded in violation of federal or state patient privacy laws, including, among others, HIPAA and the Privacy Act of 1974; [removed: |]

[removed: | • |] [added: -] Mandated changes to our practices or procedures that significantly increase operating expenses that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our billing and business practices which could lead to potential fines, among other things; [removed: |]

[removed: | • |] [added: -] Termination of various relationships and/or contracts related to our business, such as joint venture arrangements, medical director agreements, real estate leases and consulting agreements with physicians; and [removed: |]

[removed: | • |] [added: -] Harm to our reputation which could negatively impact our business relationships and stock price, affect our ability to attract and retain patients, physicians and teammates, affect our ability to obtain financing and decrease access to new business opportunities, among other things. [removed: |]

Additionally, the healthcare sector, including the dialysis industry, is [added: also] regularly subject to negative publicity, including as a result of governmental investigations, adverse media coverage and political debate surrounding industry regulation.

See Note 16 to the consolidated financial statements included in this report for further details regarding [removed: the] [added: certain] pending legal proceedings and regulatory matters to which we are or may be subject from time to time, any of which may include allegations of violations of applicable laws, regulations and requirements.

We are, and may in the future be, a party to various lawsuits, demands, claims, qui tam suits, governmental investigations and audits [removed: (including, without limitation, investigations or other actions resulting from our obligation to self-report suspected violations of law)] and other legal matters, any of which could result in, among other things, substantial financial penalties or awards against us, mandated refunds, substantial payments made by us, required changes to our business practices, exclusion from future participation in Medicare, Medicaid and other healthcare programs and possible criminal penalties, any of which could have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price.

[added: Negative] findings or terms and conditions that we might agree to accept as part of a negotiated resolution of pending or future legal or regulatory matters could result in, among other things, substantial financial penalties or awards against us, substantial payments made by us, harm to our reputation, required changes to our business practices, exclusion from future participation in Medicare, Medicaid and other healthcare programs and, in certain cases, criminal penalties, any of which could have a material adverse effect on us.

[removed: The extensive federal and state] [added: Each of the] laws, regulations and [added: other] requirements that govern our business may continue to change over time, and there is no assurance that we will be able to accurately predict the nature, timing or extent of such changes or the impact of such changes on the markets in which we conduct business or on the other participants that operate in those markets.

[removed: For example,] [added: Among other things,] the regulatory framework of the Patient Protection and Affordable Care Act and the Health Care Reconciliation Act of 2010, as amended [removed: (ACA),] [added: (collectively, the ACA),] and other healthcare reforms [removed: continues] [added: continue] to evolve as a result of executive, legislative, regulatory and administrative developments and judicial proceedings.

[removed: While legislative attempts to completely repeal the ACA have been unsuccessful to date, there] [added: There] have been multiple attempts to repeal or amend the ACA through legislative action and legal [removed: challenges.][added: challenges, and the most recent challenge is currently before the U.S. Supreme Court.]

[removed: Nevertheless, previously enacted reforms and future changes, including among others, any changes] [added: Deterioration] in [removed: legislation, regulation or market conditions] [added: economic conditions, whether] in connection with [removed: or resulting from] the [removed: upcoming elections,] [added: COVID-19 pandemic or otherwise,] could have a material adverse effect on our business, results of operations, financial condition and cash flows.

[removed: For example,] [added: In addition,] our revenue [added: and operating income] levels are [added: highly] sensitive to the percentage of our patients with higher-paying commercial health [removed: insurance,] [added: insurance] and [removed: as such,] [added: any] legislative, regulatory or other changes that decrease the accessibility and availability, including the duration, of commercial insurance may have a material adverse impact on our business.

[removed: Other proposed legislative developments or administrative decisions, such as moving to a universal health insurance or "single payor" system whereby health insurance is provided to all Americans by the government under government programs, or lowering or eliminating the cost-sharing reduction subsidies under the ACA,] [added: Some of these and other related changes] could [added: in turn] impact the percentage of our patients with higher-paying commercial health insurance, impact the scope [added: or terms] of coverage under commercial health plans and increase our expenses, among other things.

Although we cannot predict the short- or long-term effects of legislative or regulatory [removed: changes or the potential outcome or impact of the upcoming elections,] [added: changes,] we believe that future market changes could result [removed: in] [added: in, among other things,] more restrictive commercial plans with lower reimbursement rates or higher deductibles and co-payments that patients may not be able to pay.

[removed: *number] [added: If the number or percentage] of patients with higher-paying commercial insurance declines, it could have a material adverse effect on our business, results of operations, financial condition and cash [removed: flows."*][added: flows.]

[removed: Failure to timely identify, quantify and return overpayments may result in significant penalties,] [added: disadvantages,] which could have a material adverse effect on our business, [removed: results of operations,] financial [removed: condition, cash flows] [added: condition] and [removed: reputation.][added: results of operations.]

In addition to the [removed: ACA,] [added: above risks under the current Medicare ESRD program,] changing legislation and other regulatory and executive developments have led [added: and may continue] to [added: lead to] the emergence of new models of care and other initiatives in both the government and private [removed: sector.][added: sector that, among other things, may impact the structure of, and payment rates under, the Medicare ESRD program.]

Any failure on our part to adequately implement strategic initiatives to adjust to [removed: these] [added: any] marketplace developments [added: resulting from executive, legislative, regulatory or administrative changes such as these] could have a material adverse impact on our business.

For example, [removed: as noted above, the July 10, 2019] [added: an] executive order [added: issued in July 2019] (the 2019 Executive Order) [removed: related to kidney care] directed CMS to create payment models [added: through CMMI] to evaluate the effects of creating payment incentives for the greater use of [removed: home] [added: home-based] dialysis and kidney transplants for those already on [removed: dialysis.][added: dialysis, improve quality of care for kidney patients and reduce expenditures.]

For additional detail on the [removed: risks related] [added: competitive landscape in kidney care, see the risk factor under the heading *"If we are unable] to [added: compete successfully, including, without limitation, implementing] our [removed: home] [added: growth strategy and/or retaining patients and physicians willing to serve as medical directors, it could materially adversely affect our business, results of operations, financial condition and cash flows,"* and for additional detail on the impact of COVID-19 on our home-based] dialysis [removed: services,] [added: business,] see the [removed: discussion] [added: risk factor] under the heading [removed: "*If] [added: "*We face various risks related to the dynamic and evolving novel coronavirus pandemic, any of which may have a material adverse impact on us."* If] we are not able to successfully implement our strategy with respect to home-based dialysis, including maintaining [added: our existing business] and further developing our capabilities in a complex and highly regulated environment, it could have a material adverse effect on our business, results of operations, financial condition and cash flows, and could materially harm our [removed: reputation.*"][added: reputation.]

Summary Risk Factors

The following is a summary of the principal risks and uncertainties that could adversely affect our business, cash flows, financial condition and/or results of operations, and these adverse impacts may be material.

This summary is qualified in its entirety by reference to the more detailed descriptions of the risks and uncertainties included in this Item 1A below and you should read this summary together with those more detailed descriptions.

These principal risk and uncertainties relate to, among other things:

*Risks Related to the Operation of our Business*

- the dynamic and evolving novel coronavirus pandemic;

- the complex set of governmental laws, regulations and other requirements that impact us, including potential changes thereto;

- the various lawsuits, demands, claims, *qui tam* suits, governmental investigations and audits and other legal matters that we may be subject to from time to time;

- our ability to comply with complex privacy and information security laws that impact us and/or our ability to properly maintain the integrity of our data, protect our proprietary rights to our systems or defend against cybersecurity attacks;

- our negotiations and arrangements with commercial payors, including with respect to value-based care and Medicare Advantage plans, the average rates that commercial payors pay us, any restrictions in plan designs or other contractual terms, including, without limitation, the scope and duration of coverage and in-network benefits;

- our ability to successfully implement our strategy with respect to home-based dialysis;

- changes in the structure of and payment rates under government-based programs;

- changes in clinical practices, payment rates or regulations impacting pharmaceuticals;

- our ability to compete successfully, including, without limitation, implementing our growth strategy and/or retaining patients and physicians willing to serve as medical directors;

- our acquisitions, mergers, joint ventures or dispositions;

- our ability to establish and maintain supply relationships that meet our needs at cost-effective prices or at prices that allow for adequate reimbursement as applicable, as well as our ability to access new technology or superior products in a cost-effective manner;

- our ancillary services and strategic initiatives, including without limitation, our international operations and our ability to expand within markets or to new markets, or invest in new products or services;

- our ability to appropriately estimate the amount of dialysis revenues and related refund liabilities;

- changes in physician referrals to our dialysis centers, whether due to governmental laws, regulations or other requirements, new competition, a perceived decrease in the quality of service levels at our centers or other reasons;

- increases in labor costs, including, without limitation, due to shortages, changes in certification requirements and/or higher than normal turnover rates in skilled clinical personnel; or currently pending or future governmental laws, rules, regulations or initiatives;

- our ability to attract and retain key leadership talent;

- our ability to attract and retain employees or our ability to manage operating cost increase or productivity decreases whether due to union organizing activities or legislative or other changes;

- our ability to effectively maintain, operate or upgrade our information systems or those of third-party service providers upon which we rely, including, without limitation, our clinical, billing and collections systems;

*General Risks*

- our current or future level of indebtedness, including, without limitation, our ability to generate cash to service our indebtedness and for other intended purposes and our ability to maintain compliance with debt covenants;

- changes in tax laws, regulations and interpretations or challenges to our tax positions;

- liability claims for damages and other expenses that are not covered by insurance or exceed our existing insurance coverage;

- our ability to successfully maintain an effective internal control over financial reporting;

- deterioration in economic conditions, disruptions in the financial markets or the effects of natural or other disasters, political instability, public health crises or adverse weather events such as hurricanes, earthquakes, fires or flooding, including as such events may be impacted by the effects of climate change; and

Risks Related to the Operation of our Business

We face various risks related to the dynamic and evolving novel coronavirus pandemic, any of which may have a material adverse impact on us.

The disease caused by the novel coronavirus (COVID-19) is impacting the world and our business in many different ways.

The ultimate impact of COVID-19 on us will depend on future developments that are highly uncertain and difficult to predict, including among other things, the severity and duration of the pandemic; further spread or resurgence of the virus, including as a result of the emergence of new strains of the virus; its impact on the chronic kidney disease (CKD) population and our patient population; the availability, acceptance, impact and efficacy of COVID-19 treatments, therapies and vaccines; the pandemic’s continuing impact on the U.S. and global economies and unemployment; the responses of our competitors to the pandemic and related changes in the marketplace; and the timing, scope and effectiveness of federal, state and local governmental responses.

The impact could come in many forms, including but not limited to those described below.

- We have experienced and expect to continue to experience a negative impact on revenue and non-acquired growth from COVID-19 due to lower treatment volumes, including from the negative impact on our patient census that is the result of changes in rates of mortality.

Because ESRD patients may be older and generally have comorbidities, several of which are risk factors for COVID-19, we believe the mortality rate of infected patients is, and will continue to be, higher in the dialysis population than in the general population, and COVID-19 also could impact the CKD population differentially.

Over the longer term, we believe that changes in mortality in both the CKD and ESRD populations due to COVID-19 will depend primarily on the infection rate, case fatality rate, the age and health status of affected patients, the access to and efficacy of vaccinations as well as willingness to be vaccinated.

We expect that these changes are likely to continue to negatively impact our revenue and non-acquired growth even as the pandemic subsides.

However, determining the extent to which these impacts should be directly attributable to COVID-19 is difficult due to testing and reporting limitations, and other factors may drive treatment volumes and new admissions over time, such as the number of transplants or deferred admissions.

The magnitude of these cumulative impacts has been substantial and, depending on the ultimate severity and duration of the pandemic could be material.

These statements involve known and unknown risks and uncertainties including those discussed below.

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| • | federal and state anti-kickback laws, including, without limitation, any applicable exceptions or regulatory safe harbors thereunder; |

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| • | the Physician Self-Referral Law (the Stark Law) and analogous state self-referral prohibition laws; |

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| • | the False Claims Act (FCA) and associated regulations; |

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| • | the Civil Monetary Penalty statute (CMP) and associated regulations; |

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In addition, on October 9, 2019, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS) released a pair of proposed rules that, if adopted, would change the Federal Anti-Kickback Statute (AKS), CMP and Stark Law regulations to promote certain value-based and coordinated care arrangements.

The proposed rules were subject to a comment period ending in December 2019 and remain subject to change until the publication of any final rules, the date and content of which are currently unknown.

We have historically been subject to a five-year Corporate Integrity Agreement (CIA) with OIG.

The term of the CIA expired on October 22, 2019, and the Company is in the process of working with the independent monitor and OIG to close out the review of the final annual reports by the independent monitor and the Company.

The CIA (i) required that we maintain certain elements of our compliance programs; (ii) imposed certain expanded compliance-related requirements during the term of the CIA; (iii) required ongoing monitoring and reporting by an independent monitor, imposed certain reporting, certification, records retention and training obligations, allocated certain oversight responsibility to the Board's Compliance Committee, and necessitated the creation of a Management Compliance Committee and the retention of an independent compliance advisor to the Board; and (iv) contained certain business restrictions related to a subset of our joint venture arrangements.

Until OIG closes out the CIA following review of the aforementioned final annual reports, OIG retains the right to impose penalties,

sanctions and other consequences on us under the CIA, including, without limitation, potential exclusion from federal healthcare programs.

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*This Annual Report on Form 10-K, 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 [removed: laws.][added: 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.]

Without limiting the foregoing, statements including the words "expect," "intend," "will," [added: "could,"] "plan," "anticipate," "believe," "forecast," "guidance," "outlook," "goals," and similar expressions are intended to identify forward-looking statements.

[removed: Our actual results and other] [added: Actual future] events [added: and results] could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties.

[removed: | *•* | *the] [added: *•the] concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on [added: average] realized payment rates, and a reduction in the number [added: or percentage] of [added: our] patients under such plans, [removed: including] [added: including, without limitation,] as a result of restrictions or prohibitions on the use and/or availability of charitable premium assistance, which may result in the loss of revenues or patients, or our making incorrect assumptions about how our patients will respond to any change in financial assistance from charitable organizations;* [removed: |]

[removed: | *•* | *the] [added: *•the] extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof or related litigation result in a reduction in coverage or reimbursement rates for our services, a reduction in the number of patients enrolled in higher-paying commercial [removed: plans,] [added: plans] or [added: that are enrolled in or select Medicare Advantage plans or] other material impacts to our business; or our making incorrect assumptions about how our patients will respond to any such developments;* [removed: |]

[removed: | • |] [added: -] *a reduction in government payment rates under the Medicare End Stage Renal Disease program or other government-based programs and the impact of the Medicare Advantage benchmark structure;* [removed: |]

[removed: | • | *risks] [added: *•risks] arising from potential [added: changes in laws, regulations or requirements applicable to us, such as potential] and proposed federal and/or state legislation, regulation, ballot, executive action or other initiatives, including [removed: such initiatives] [added: those] related to healthcare and/or labor [removed: matters;* |][added: matters, such as AB 290 in California;*]

[removed: | • | *the] [added: *•the] impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act, the exchanges and many other core [removed: aspects of the current healthcare marketplace;* |][added: aspects*]

[removed: | *•* | *our] [added: *•our] ability to successfully implement our [removed: strategy] [added: strategies] with respect to home-based dialysis, [added: value-based care and/or integrated kidney care,] including maintaining our existing business and further developing our capabilities in a complex and highly regulated environment;* [removed: |]

[removed: | • |] [added: -] *changes in pharmaceutical practice patterns, reimbursement and payment policies and processes, or pharmaceutical pricing, including with respect to [removed: calcimimetics;* |][added: hypoxia inducible factors;*]

[removed: | • |] [added: -] *legal and compliance risks, such as our continued compliance with complex government regulations;* [removed: |]

[removed: | • |] [added: -] *continued increased competition from dialysis providers and others, and other potential marketplace changes;* [removed: |]

[removed: | • |] [added: -] *our ability to maintain contracts with physician medical directors, changing affiliation models for physicians, and the emergence of new models of care introduced by the government or private sector that may erode our patient base and reimbursement rates, such as accountable care organizations, independent practice associations and integrated delivery systems;* [removed: |]

[removed: | • |] [added: -] *our ability to complete acquisitions, mergers or dispositions that we might announce or be considering, on terms favorable to us or at all, or to integrate and successfully operate any business we may acquire or have acquired, or to successfully expand our operations and services in markets outside the United States, or to businesses outside of dialysis;* [removed: |]

[removed: | • | *noncompliance] [added: *•noncompliance] by us or our business associates with any privacy or security laws or any security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information;* [removed: |]

[removed: | • | *the] [added: *•the] variability of our cash [removed: flows;] [added: flows, including without limitation any extended billing or collections cycles;] the risk that we may not be able to generate [added: or access] sufficient cash in the future to service our indebtedness or to fund our other liquidity needs; and the risk that we may not be able to refinance our indebtedness as it becomes due, on terms favorable to us or at all;* [removed: |]

[removed: | • |] [added: -] *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 our use of a considerable amount of available funds to repurchase stock;* [removed: |]

[removed: | • |] [added: -] *risks arising from the use of accounting estimates, judgments and interpretations in our financial statements;* [removed: |]

[removed: | • |] [added: -] *impairment of our goodwill, investments or other [removed: assets;* |][added: assets; and*]

[removed: | • | *uncertainties associated with the other risk factors set forth in Part I, Item* *1A.] of this Annual Report on Form 10-K, and the other risks and uncertainties discussed in any subsequent reports that we file or furnish with the SEC from time to time.* [removed: |]

[removed: All] [added: These] forward-looking statements [removed: in this report] are based [added: on DaVita's current expectations and are based] solely on information available [removed: to us on] [added: as of] the date of this report.

[removed: We undertake] [added: 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 [added: may be] required by [removed: law.*][added: law.]

Our U.S. dialysis business is a leading provider of kidney dialysis services in the U.S. for patients suffering from chronic kidney failure, also known as end stage renal disease [removed: (ESRD).][added: (ESRD) or end stage kidney disease (ESKD).]

On June 19, 2019, we completed the sale of our DaVita Medical Group (DMG) business to Collaborative Care Holdings, [removed: LLC (Optum),] [added: LLC,] a subsidiary of UnitedHealth Group Inc. As a result of this transaction, DMG's results of operations have been reported as discontinued operations for all periods presented and DMG is not included below in this Management's Discussion and Analysis.

Drivers of our financial performance in [removed: 2019] [added: 2020] included the following:

[removed: | • |] [added: -] improved key clinical outcomes in our U.S. dialysis business, including our recognition as an industry leader for the [removed: seventh] [added: eighth] consecutive year in CMS’ Quality Incentive Program and for the last [removed: six] [added: seven] years under the CMS Five-Star Quality Rating system; [removed: |]

[removed: | • | U.S. dialysis] [added: -] revenue growth of [removed: 2.2%] [added: 0.9% in U.S. dialysis, 5.3% in U.S. ancillary services,] and [added: 11.0% in] international [removed: revenue growth of 13.6%; |][added: operations;]

[removed: | • |] [added: -] a net increase of [removed: 89] [added: 63] U.S. and [removed: 18] [added: 62] international dialysis [removed: centers; |][added: centers, including entering a new country, the United Kingdom;]

[removed: | • |] [added: -] operating cash flows of [removed: $2.0] [added: $1.979] billion from continuing operations; [removed: |]

[removed: | • |] [added: -] repurchase of [removed: 41,020,232] [added: 16,477,378] shares of our common stock for aggregate consideration of [removed: $2.4 billion] [added: $1.447 billion,] and reduction of our share count by [removed: approximately 24.4%] [added: 12.6%] year-over-year; [removed: and |]

On reimbursement rate, we expect modest growth in aggregate, primarily due to the expected net market basket update for Medicare [removed: treatments.][added: treatments as well as an increase in Medicare Advantage enrollment due to the 21st Century Cures Act, partially offset by the scheduled resumption of Medicare sequestration in 2021.]

On cost, we continue to expect inflationary pressure on wage rates and other costs, [added: partially] offset by continued savings on [removed: drug] [added: pharmaceutical] costs.

The discussion below includes analysis of our financial condition and results of operations for the years ended December 31, [removed: 2019] [added: 2020] compared to December 31, [removed: 2018.][added: 2019.]

Our Annual Report on Form 10-K for the year ended December 31, [removed: 2018,] [added: 2019,] includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, [removed: 2017,] [added: 2018,] in [added: its] Part II Item 7, [removed: "Management's] [added: "*Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations".][added: Operations*".]

References to the "Notes" in the discussion below refer to the notes to the Company's consolidated financial statements included in this Annual Report on Form 10-K at Item 15, [removed: "Exhibits,] [added: "*Exhibits,] Financial Statement [removed: Schedules"] [added: Schedules*"] as referred from Part II Item 8, [removed: "Financial] [added: "*Financial] Statements and Supplementary [removed: Data."][added: Data.*"]

See the discussion of our results for each line of business following this [removed: table.][added: table:]

| | [added: | |] Year ended December 31, | | | | | | | | [added: | | | |] Annual change | | | | | | [added: | | |]

| | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [added: 2019 | | | | | |] Amount | | | | [added: | |] Percent | | [added: |]

| | [added: | |] (dollars in millions) | | | | | | | | | | | | | | [added: | | | | | | |]

| Revenues: | | | | | | | | | | | | | | | [added: | | | | | | | | |]

These forward-looking statements could include, among other things, DaVita's response to and the expected future impacts of the novel coronavirus (COVID-19), including statements about our balance sheet and liquidity, our expenses and expense offsets, revenues, billings and collections, potential need, ability or willingness to use any funds under government relief programs, availability or cost of supplies, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, the availability and administration of COVID-19 vaccines, and overall impact on our patients and teammates, as well as other statements regarding our future operations, financial condition and prospects, expenses, strategic initiatives, government and commercial payment rates, expectations related to value-based care and Medicare Advantage plan enrollment and our ongoing stock repurchase program.

*•the continuing impact of the dynamic and evolving COVID-19 pandemic, including, without limitation, on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition and results of operations; the government’s response to the COVID-19 pandemic; the availability, acceptance, impact and efficacy of COVID-19 treatments, therapies and vaccines; further spread or resurgence of the virus, including as a result of the emergence of new strains of the virus; the continuing impact of the pandemic on our revenue and non-acquired growth due to lower treatment volumes; the consequences of an extended economic downturn resulting from the impacts of COVID-19, such as a potential negative impact on our commercial mix, which may persist even after the pandemic subsides; and continuing COVID-19-related costs, such as costs to procure equipment and clinical supplies and higher salary and wage expense.

The aforementioned risks and uncertainties may also have the effect of heightening many of the other risks and uncertainties discussed below;*

*of the current healthcare marketplace, as well as the composition of the U.S. Supreme Court and the new presidential administration and congressional majority;*

- *uncertainties associated with the other risk factors set forth in Part I, Item 1A.

Notwithstanding the challenges of responding to the novel coronavirus pandemic (COVID-19), our year-over-year overall financial performance in 2020 benefited from increased revenue, which was primarily due to higher average revenue per treatment in our U.S. dialysis business as well as acquired growth in our international business.

This was partially offset by increases in labor costs (both operating and overhead), lower margin on calcimimetics, increases in advocacy costs, and increased costs driven by the emergence of COVID-19, including increased costs related to compensation and medical supplies.

- refinancing transactions, including the redemption of our 5.125% and 5.0% senior notes, the issuance of our new 4.625% and 3.75% senior notes and the repricing of our Term Loan B-1 resulting in lower debt expense; and

- impact of COVID-19 as further discussed in Part I.

Item 1 *“Business”* and under the heading "*COVID-19 and its impact on our business"* below.

In 2021, we expect that COVID-19 will continue to impact our business and financial performance, as described in further detail below, though the magnitude of these impacts remains difficult to predict and subject to significant uncertainty due to a number of factors, including, among others, the severity and duration of the pandemic; further spread or resurgence of the virus, including as a result of the emergence of new strains of the virus; its impact on the CKD patient population and our patient population; the availability, acceptance, impact and efficacy of COVID-19 treatments, therapies and vaccines; the pandemics' continuing impact on the U.S. and global economies and unemployment; the responses of our competitors to the pandemic and related changes in the marketplace; and the timing, scope and effectiveness of federal, state and local government responses.

The continued impacts and disruptions to our business as a result of the COVID-19 pandemic could have a material adverse impact on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition, results of operations, cash flows and/or liquidity.

On treatment volume, we continue to face pressure primarily driven by the impact of COVID-19 on mortality rates for dialysis patients.

This pressure is also influenced by slowing industry growth and competitive activity.

We expect to incur significantly less advocacy costs in 2021 than we experienced in 2020.

We also expect to continue making investments to expand our ability to offer home-based dialysis service options and further advance our integrated care and value-based care initiatives in 2021.

Finally, the timing and scope of any potential changes to the regulatory landscape remain uncertain, particularly in light of the ongoing COVID-19 pandemic and the incoming new federal administration, and as such, considerable uncertainty exists surrounding the continued development of the various governmental laws, regulations and other requirements that impact our business.

COVID-19 and its impact on our business

As noted above and described in further detail in Part I Item 1, "*Business*," we continue to closely monitor the impact on our business of the pandemic and the resulting economic environment, including the impact on our patients, teammates, physician partners, suppliers, vendors and business partners.

We have dedicated and continue to dedicate substantial resources in response to COVID-19, to help safely maintain continuity of care for our patients throughout this crisis, whether in the hospital, outpatient or home setting, and to help protect our caregivers.

Our COVID-19 response has included, among other things, the implementation of additional protocols and operational initiatives related to infection control and clinical best practices, redistribution of resources across geographies and increased investment in and utilization of telehealth capabilities.

We also have maintained business process continuity during the pandemic by enabling most back office teammates to work remotely and implemented guidance early in the pandemic to help mitigate health and safety risks to our teammates imposed by COVID-19.

Our response protocol generally has allowed us to maintain continuity of care for our patients and we carefully monitor the efficacy of these protocols and their impact on our operations and strategic initiatives as the pandemic continues.

Due in part to the protocols and initiatives described above, we incurred significant costs related to COVID-19 in 2020, and we expect to continue to incur extended and significant additional costs in connection with our response to COVID-19.

For example, we have had, and expect to continue to have, increased costs associated with a high demand for our skilled clinical personnel.

Additionally, the steps we have taken designed to help safely maintain continuity of care for our patients and help protect our caregivers, such as our policies to implement dedicated care shifts for patients with confirmed or suspected COVID-19 and other enhanced clinical practices, have increased, and are expected to continue to increase, our expenses and use of personal protective equipment (PPE).

Our response to COVID-19 also has resulted in higher salary and wage expense, and we have provided, and may provide in the future, substantial financial support associated with relief reimbursement to our teammates.

Furthermore, the effort and cost needed to procure certain of our equipment and clinical supplies, including PPE, have increased, and we expect that these increased costs will continue while the pandemic persists.

However, our COVID-19 response reduced certain other expenses in 2020, such as those related to teammate travel, though it remains uncertain how much of these reductions, if any, will persist after the pandemic subsides.

We have experienced and expect to continue to experience a negative impact on revenue and non-acquired growth from COVID-19 due to lower treatment volumes, including from the negative impact on our patient census that is the result of changes in rates of mortality.

Because ESRD patients may be older and generally have comorbidities, several of which are risk factors for COVID-19, we believe the mortality rate of infected patients is, and will continue to be, higher in the dialysis population than in the general population, and COVID-19 also could impact the CKD population differently.

Over the longer term, we believe that changes in mortality in both the CKD and ESRD populations due to COVID-19 will depend primarily on the infection rate, case fatality rate, the age and health status of affected patients, the access to and efficacy of vaccinations as well as willingness to be vaccinated.

We expect that these changes are likely to continue to negatively impact our revenue and non-acquired growth even as the pandemic subsides.

However, determining the extent to which these impacts should be directly attributable to COVID-19 is difficult due to testing and reporting limitations, and other factors that may drive treatment volumes and new admissions over time, such as the number of transplants or deferred admissions.

The magnitude of these cumulative impacts has been substantial, and depending on the ultimate severity and duration of the pandemic, could be material.

In addition, the COVID-19 pandemic and efforts to contain the virus have led to global economic deterioration and rapid and sharp increases in unemployment levels, which ultimately could result in a materially reduced share of our patients being covered by commercial insurance plans, with more patients being covered by lower-paying government insurance programs or being uninsured.

These effects may persist after the pandemic subsides as, among other things, our patients could experience permanent changes in their insurance coverage as a result of changes to their employment status.

In the event such a material reduction occurs in the share of our patients covered by commercial insurance plans, it would have a material adverse impact on our business, results of operations, financial condition and cash flows.

The extent of these effects will be dependent upon, among other things, the extent and duration of the increased unemployment levels for our patient population, economic deterioration and potential recession; the timing and scope of federal, state and local governmental responses to the ongoing pandemic; and patients’ ability to retain existing insurance and their individual choices with respect to their coverage.

Despite

These forward-looking statements include but are not limited to statements regarding our future operations, financial condition and prospects, such as expectations for operating cash flow, estimated charges and accruals, the development of new dialysis centers and dialysis center acquisitions or other new service offerings, government and commercial payment rates, and our stock repurchase program.

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| *•* | *uncertainties related to potential payments and/or adjustments under certain provisions of the equity purchase agreement for the sale of our DaVita Medical Group (DMG) business, such as post-closing adjustments and indemnification obligations;* |

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| • | *uncertainties related to our use of the proceeds from the DMG sale transaction and other available funds, including external financing and cash flow from operations, which may be or have been used in ways that we cannot assure will improve our results of operations or enhance the value of our common stock; and* |

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The [added: first] table below presents principal repayments and current weighted average interest rates on our debt obligations as of December 31, [removed: 2019.][added: 2020.]

The variable rates presented reflect the weighted average LIBOR rates in effect for all debt tranches plus interest rate margins in effect as of December 31, [removed: 2019.][added: 2020.]

The [removed: Term Loan A] interest [removed: rate margin] [added: rates] in effect [removed: at December 31, 2019, was 1.50%, and along with] [added: on] our [added: Term Loan A and] revolving line of [removed: credit, is] [added: credit are] subject to adjustment depending upon changes in [removed: certain of] our [removed: financial ratios, including a] leverage ratio.

[removed: At December 31, 2019, the] [added: The] Term Loan [removed: B] [added: A] interest rate margin in effect [added: at December 31, 2020,] was [removed: LIBOR plus an interest rate margin of 2.25%.][added: 1.50%.]

| | [added: | |] Expected maturity date | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |] Average interest rate | | | [added: | | |] Fair [removed: value] [added: value(1)] | | |

| | [removed: 2020] | | [added: 2021] | | [removed: 2021] | | | | 2022 | | | | [added: | |] 2023 | | | | [added: | |] 2024 | | | | [added: | | 2025 | | | | | |] Thereafter | | | | [added: | |] Total | | | | | | | | | | [added: | | | | |]

| | [added: | |] (dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | |]

| Long term debt: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]

| | [added: | |] Notional amount | | | | [added: | |] Contract maturity date | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |] Receive variable | | [added: | | | |] Fair value | | |

| | | [removed: 2020] | | | | 2021 | | | | [added: | |] 2022 | | | | [added: | |] 2023 | | | | [added: | |] 2024 | | | | | | [added: 2025] | | | | | | [added: | | | | | | | | | | | |]

| | [added: | |] (dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| [removed: 2015] [added: 2019] cap agreements | [added: | |] $ | 3,500 | | | [added: | |] $ | [removed: 3,500] [added: —] | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | [removed: —] [added: 3,500] | | | [added: | |] $ | — | | | [added: | |] LIBOR above [removed: 3.5%] [added: 2.0%] | | [added: | | | |] $ | [removed: —] [added: 2.7] | |

For a further discussion of our debt, see Note 13 to our consolidated financial statements at Part II Item 15, [removed: "Exhibits,] [added: "*Exhibits,] Financial Statement Schedules" – Note 13 – "Long-term [removed: debt"] [added: debt*"] as referred from Part II Item 8, [removed: "Financial] [added: "*Financial] Statements and Supplementary [removed: Data."][added: Data.*"]

Under this model, with all else constant, it is estimated that such an increase would have reduced net income by approximately [removed: $32.4] [added: $34.8] million, [removed: $37.8] [added: $32.4] million, and [removed: $27.6] [added: $37.8] million, net of tax, for the years ended December 31, [added: 2020,] 2019, [removed: 2018,] and [removed: 2017,] [added: 2018,] respectively.

While our business is predominantly conducted in the U.S., we have developing operations in [removed: nine] [added: ten] other countries as well.

Through [removed: 2019,] [added: 2020,] our international operations [added: have] remained fairly small relative to the size of our consolidated financial statements, constituting approximately [removed: 8%] [added: 9%] of our consolidated assets as of December 31, [removed: 2019,] [added: 2020, with no single country constituting more than 3% of consolidated assets,] and approximately [removed: 4%] [added: 5%] of our consolidated revenues for the year ended December 31, [removed: 2019.][added: 2020.]

In addition, our foreign currency translation (losses) gains were approximately [added: (0.4)%,] (1)%, [removed: (3)%,] and [removed: 6%] [added: (3)%] of our consolidated operating income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

Given the [added: relatively] small size of our international operations, management does not consider our exposure to foreign exchange risk to be significant to the consolidated enterprise.

As such, through December 31, [removed: 2019,] [added: 2020,] we have not engaged in transactions to hedge the exposure of our international transactions or net investments to foreign currency risk.

At December 31, 2020, the Term Loan B-1 interest rate margin in effect was 1.75%.

At December 31, 2020, we had an outstanding balance on our revolving line of credit bearing interest at an Alternate Base Rate (the Prime Rate) plus 0.50%.

On January 6, 2021 our revolving line of credit rate was converted to a LIBOR-based rate of LIBOR plus 1.50%.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fixed rate | | | $ | 31 | | | | | $ | 34 | | | | | $ | 48 | | | | | $ | 29 | | | | | $ | 33 | | | | | $ | 3,448 | | | | | $ | 3,623 | | | | | 4.32 | | % | | | | $ | 3,481 | |

| Variable rate | | | $ | 138 | | | | | $ | 136 | | | | | $ | 179 | | | | | $ | 1,468 | | | | | $ | 36 | | | | | $ | 2,584 | | | | | $ | 4,541 | | | | | 2.05 | | % | | | | $ | 4,518 | |

(1)Represents the fair value of our long-term debt excluding financing leases.

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| Fixed rate | $ | 32 | | | $ | 27 | | | $ | 29 | | | $ | 42 | | | $ | 1,777 | | | $ | 1,717 | | | $ | 3,624 | | | 5.11 | % | | $ | 3,702 | |

| Variable rate | $ | 98 | | | $ | 126 | | | $ | 140 | | | $ | 183 | | | $ | 1,395 | | | $ | 2,615 | | | $ | 4,557 | | | 3.94 | % | | $ | 4,585 | |

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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2019 cap agreements | $ | 3,500 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3,500 | | | LIBOR above 2.0% | | $ | 24 | |

[removed: Incorporated as a Delaware corporation in 1994, we] [added: We] are one of the largest providers of kidney care services in the U.S. and have been a leader in clinical quality and innovation for over 20 years.

This culture and philosophy fuel our continuous drive [removed: towards] [added: toward] achieving our mission to be the provider, partner and employer of choice and fulfilling our vision to "build the greatest healthcare community the world has ever seen."

As of December 31, [removed: 2019,] [added: 2020,] we provided dialysis and administrative services and related laboratory services throughout the U.S. via a network of [removed: 2,753] [added: 2,816] outpatient dialysis centers in 46 states and the District of Columbia, serving a total of approximately [removed: 206,900] [added: 204,200] patients and provided [removed: acute] [added: hospital] inpatient dialysis services in approximately 900 hospitals.

In addition, as of December 31, [removed: 2019,] [added: 2020,] we provided dialysis and administrative services to a total of [removed: 259] [added: 321] outpatient dialysis centers located in ten countries outside of the U.S., serving approximately [removed: 28,700] [added: 36,200] patients.

For the [removed: seventh] [added: eighth] consecutive year, we are an industry leader in the Centers for Medicare & Medicaid Services’ (CMS) Quality Incentive Program (QIP), which promotes high quality services in outpatient dialysis facilities treating patients with ESRD.

We are also an industry leader for the [removed: sixth] [added: seventh] consecutive year under CMS’ Five-Star Quality Rating system, which rates eligible dialysis centers based on the quality of outcomes to help patients, their families, and caregivers make more informed decisions about where patients receive care.

[removed: In addition,] [added: According to the most recently collected data,] we are an industry leader for the total number of patients in home-based dialysis services.

In addition to our teammates at our dialysis facilities, as of December 31, [removed: 2019,] [added: 2020,] our [added: domestic] Chief Medical Officer leads a team of [removed: 15] [added: 18] senior nephrologists in our physician leadership team as part of our [added: domestic] Office of the Chief Medical Officer (OCMO).

[removed: This team represents] [added: Our OCMO teammates represent] a variety of academic, clinical practice, and clinical research backgrounds.

We also have a Physician Counsel that serves as an advisory body to senior management, which is composed of nine physicians with extensive experience in clinical [removed: practice, as well as eight] [added: practice and have seven] Group Medical Directors as of December 31, [removed: 2019.][added: 2020.]

On June 19, 2019, we completed the sale of our DaVita Medical Group (DMG) business, a patient and physician-focused integrated healthcare delivery and management company, to Collaborative Care Holdings, [removed: LLC (Optum),] [added: LLC,] a subsidiary of UnitedHealth Group Inc. As a result, the DMG business has been classified as discontinued operations and its results of [added: operations are reported as discontinued operations for all periods presented in the consolidated financial statements included in this report.]

As of December 31, [removed: 2019,] [added: 2020,] we provided dialysis and administrative services in the U.S. through a network of [removed: 2,753] [added: 2,816] outpatient dialysis centers in 46 states and the District of Columbia, serving a total of approximately [removed: 206,900] [added: 204,200] patients.

We also provide [removed: acute] [added: hospital] inpatient dialysis services in approximately 900 hospitals and related laboratory services throughout the U.S.

According to the United States Renal Data System (USRDS), there were over [removed: 523,000] [added: 555,000] ESRD dialysis patients in the U.S. in [removed: 2017.][added: 2018.]

Based on the most recent [removed: 2019] [added: 2020] annual data report from the USRDS, the underlying ESRD dialysis patient population has grown at an approximate compound rate of [removed: 3.6%] [added: 3.7%] from [removed: 2007] [added: 2008] to [removed: 2017] [added: 2018] and a compound rate of [removed: 3.3%] [added: 3.5%] from [removed: 2012] [added: 2013] to [removed: 2017,] [added: 2018,] which suggests that the rate of growth of the ESRD patient population is [removed: declining.][added: declining relative to long term trends.]

See page [removed: 5] [added: 7] for further details.

For the year ended December 31, [removed: 2019,] [added: 2020,] approximately 90% of our total dialysis patients were covered under some form of government-based program, with approximately 74% of our dialysis patients covered under Medicare and [removed: Medicare-assigned] [added: Medicare Advantage] plans.

[removed: | *•* | *Hemodialysis* |][added: *•Hemodialysis*]

[removed: | *•* | *Peritoneal] [added: *•Peritoneal] dialysis* [removed: |]

The most common methods of peritoneal dialysis are continuous ambulatory peritoneal dialysis (CAPD) [added: and continuous cycling peritoneal dialysis (CCPD).]

An executive order signed in July 2019 (the 2019 Executive Order) directed the [removed: Department of Health and Human Services (HHS)] [added: HHS] to develop policies addressing, among other things, the goal of making more kidneys available for transplant.

As of December 31, [removed: 2019,] [added: 2020,] we operated or provided administrative services through a network of [removed: 2,753] [added: 2,816] outpatient dialysis centers in the U.S. that are designed specifically for outpatient hemodialysis.

In [removed: 2019,] [added: 2020,] our overall network of U.S. outpatient dialysis centers increased by [removed: 89] [added: 63] primarily as a result of the opening of new dialysis centers and acquisitions, net of center closures, representing a total increase of approximately [removed: 3.3%] [added: 2.3%] from [removed: 2018.][added: 2019.]

Our total patient turnover, which is based upon all causes, averaged approximately [removed: 24%] [added: 25%] in [removed: both 2019] [added: 2020] and [removed: 2018.][added: 24% in 2019.]

As of December 31, [removed: 2019,] [added: 2020,] we provided hospital inpatient hemodialysis services, excluding physician services, to patients in approximately 900 hospitals throughout the U.S. We render these services based on a contracted per-treatment fee that is individually negotiated with each hospital.

According to the most recent [removed: 2019] [added: 2020] annual data report from the USRDS, in [removed: 2017] [added: 2018] approximately 12% of ESRD dialysis patients in the U.S. perform home-based dialysis.

The following graph summarizes our U.S. dialysis treatments by modality and U.S. dialysis patient services revenues by modality for the year ended December 31, [removed: 2019.][added: 2020.]

[removed: ][added: ]

We currently operate or provide management and administrative services pursuant to management and administrative services agreements to [removed: 44] [added: 53] outpatient dialysis centers located in the U.S. in which we either own a noncontrolling interest or which are wholly-owned by third parties.

Our U.S. dialysis revenues represent approximately [removed: 92%] [added: 91%] of our consolidated revenues for the year ended December 31, [removed: 2019.][added: 2020.]

The sources of our U.S. dialysis revenues are principally from government-based programs, including Medicare and [removed: Medicare-assigned plans and] [added: Medicare Advantage plans,] Medicaid and managed Medicaid plans and commercial insurance plans.

Our largest source of revenue is from Medicare and [removed: Medicare-assigned] [added: Medicare Advantage] plans which accounted for [removed: 59%] [added: 57%] of our overall U.S. dialysis patient services revenues for the year ended December 31, [removed: 2019.][added: 2020.]

Other sources of our U.S. dialysis patient services revenues for the year ended December 31, [removed: 2019,] [added: 2020,] were from commercial payors (including hospital [added: inpatient] dialysis services) accounting for [removed: 31%] [added: 32%] of revenues, Medicaid and [removed: Managed] [added: managed] Medicaid plans accounting for [removed: 6%] [added: 7%] of our revenues and other government programs accounting for 4% of our revenues.

For patients with Medicare coverage, all ESRD payments for dialysis treatments are made under a single bundled payment rate which provides a fixed payment rate to encompass all goods and services provided during the dialysis treatment that are related to the dialysis treatment, including certain pharmaceuticals, such as Epogen® (EPO), vitamin D analogs and iron supplements, irrespective of the level of pharmaceuticals administered to the patient or additional services [removed: performed except for calcimimetics, a drug class taken by many patients with ESRD to treat mineral bone disorder.][added: performed.]

Under [removed: the] [added: this] ESRD Prospective Payment System (PPS), the bundled payments to a dialysis facility may be reduced by as much as 2% based on the facility’s performance in specified quality measures set annually by CMS through its [removed: Quality Incentive Program (QIP).][added: QIP.]

Uncertainty about future payment rates remains a material risk to our business, as well as the potential implementation of or changes in coverage determinations or other rules or regulations by CMS or Medicare Administrative Contractors [removed: (MACs)] that may impact reimbursement.

[removed: In] [added: On] November [removed: 2019,] [added: 9, 2020,] CMS issued a final rule to update the [removed: Medicare] ESRD PPS payment rate and policies.

Among other things, the [removed: final] rule [removed: expands] [added: provided for] the [removed: transitional drug add-on] [added: inclusion of calcimimetics in the ESRD bundled] payment [removed: to] [added: as described above; specified TDAPAs for] certain new renal dialysis drugs and biological [removed: products] [added: products;] and [removed: amends] [added: amended] the reporting measures in the ESRD QIP.

CMS estimates [added: that] the overall impact of the final rule will increase [removed: Medicare reimbursement to] ESRD [removed: facilities] [added: facilities’ average reimbursement] by [removed: 1.7%] [added: 1.6%] in [removed: 2020.][added: 2021.]

[removed: These] [added: When the temporary suspension is no longer in effect the] across-the-board spending cuts [removed: have affected and] [added: of the BCA] will continue to adversely affect our business, results of operations, financial condition and cash flows.

Our international Chief Medical Officer leads a team of 11 senior nephrologists in our physician leadership team as part of our international OCMO.

COVID-19 and its impact on our business

As a caregiving organization, we are exposed to and will continue to be impacted by the effects of the novel coronavirus (COVID-19) pandemic.

DaVita’s teammates include, among others, dialysis nurses, patient care technicians, social workers, dieticians and other caregivers who are on the front lines of the ongoing COVID-19 pandemic providing critical, life-sustaining care for our patients.

We are closely monitoring the impact on our business of the pandemic and the resulting economic environment, including the impact on our patients, teammates, physician partners, suppliers, vendors and business partners.

During this time of great challenge, our top priorities continue to be the health, safety and well-being of our patients, teammates and physician partners and helping to ensure that our patients have the ability to maintain continuity of care throughout this crisis, whether in the hospital, outpatient or home setting.

To that end, we have dedicated and continue to dedicate substantial resources in response to COVID-19, including the implementation of additional protocols in coordination with the Centers for Disease Control and Prevention (CDC) on infection control and clinical best practices to help safely maintain continuity of care for our patients and help protect our caregivers.

We also have been collaborating with the CDC, the U.S. Department of Health and Human Services (HHS), CMS, the American Society of Nephrology, and dialysis providers nationwide to help ensure that the dialysis community is able to support patients nationwide during this global health crisis.

The protocols and initiatives we have implemented in response to COVID-19 include steps designed to implement dedicated care shifts for patients with confirmed or suspected COVID-19 and other enhanced clinical practices, including procuring additional equipment and clinical supplies, including personal protective equipment (PPE) and providing financial support to our teammates associated with relief reimbursement.

These efforts are part of a wider Prepare, Prevent, Respond and Recover protocol that we have implemented in connection with the pandemic, which also includes operational protocols such as the redistribution of teammates, machines and supplies across the country as needed and increased investment in and utilization of telehealth capabilities.

We also have maintained business process continuity during the pandemic by enabling most back office teammates to work remotely.

Our response protocol generally has allowed us to maintain continuity of care for our patients and we carefully monitor the efficacy of these protocols and their impact on our operations and strategic priorities as the pandemic continues.

If we are required to maintain certain restrictive operational initiatives for an extended period of time, it may adversely impact our strategic initiatives, such as our strategy to continue to build on our abilities to offer home dialysis options.

Certain temporary changes made in response to the COVID-19 pandemic could become permanent, which could have an adverse impact on our business.

In addition, any staffing shortages or disruptions, or any equipment or clinical supply shortages, disruptions or delays or associated price increases, could impact our ability to provide dialysis services or the cost of providing those services.

Due in part to the protocols and initiatives described above, we have incurred significant costs related to COVID-19 in 2020, and we expect to continue to incur extended and significant additional costs in connection with our response to COVID-19.

We have worked with certain government agencies to respond to the COVID-19 pandemic, and in certain cases have sought waivers of regulatory requirements.

We also are working to help make COVID-19 vaccines available to our patients and teammates, including through coordination with state and federal governments on direct vaccine distribution so that we can administer vaccines to our patients and teammates.

These vaccines are currently available under emergency use authorizations, and there can be no assurance that our patients and caregivers will choose to receive a COVID-19 vaccine or that the vaccines will prove to be as safe and effective as currently understood by the scientific community.

In addition, we may encounter difficulties with the availability and storage of the vaccines, or administration of the vaccines, some of which have multiple dose requirements.

We operate in a complex and highly regulated environment, and the novel nature of our COVID-19 response, including, for example, with respect to regulatory waivers and our administration of the newly developed COVID-19 vaccines, may increase our exposure to legal, regulatory and clinical risks.

In addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent COVID-19 relief legislation temporarily suspended Medicare’s 2% sequestration from May 1, 2020 through December 31, 2020, and the Consolidated Appropriations Act subsequently extended this sequestration suspension until March 31, 2021.

While in effect, this legislation, has increased, and will continue to increase, our revenues.

Furthermore, a significant initial part of the federal government response to the COVID-19 pandemic was the CARES Act's authorization of $100 billion in funding to be distributed to healthcare providers through the federal Public Health and Social Services Emergency Fund (Provider Relief Fund).

While we declined approximately $250 million of government funding received in the second quarter of 2020 from the

Provider Relief Fund, certain of our competitors accepted such funds.

There can be no assurance that financial or other assistance will be available from the government if we have a need for such assistance in the future.

We believe the ultimate impact of this public health crisis on the Company will depend on future developments that are highly uncertain and difficult to predict, including among other things the severity and duration of the pandemic; further spread or resurgence of the virus, including as a result of the emergence of new strains of the virus; its impact on the CKD patient population and our patient population; the availability, acceptance, impact and efficacy of COVID-19 vaccines and other treatments or therapies; the pandemic’s continuing impact on the U.S. and global economies and unemployment; the responses of our competitors to the pandemic and related changes in the marketplace; and the timing, scope and effectiveness of federal, state and local governmental responses.

For additional discussion of the COVID-19 pandemic and our response, including its impact on us and related risks and uncertainties, please see the discussion below under the heading "Human Capital Management", as well as the risk factor in Item 1A Risk Factors under the heading *“We face various risks related to the dynamic and evolving novel coronavirus pandemic, any of which may have a material adverse impact on us,*” and Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Certain of these factors, in particular mortality rates for dialysis patients, have been impacted by the COVID-19 pandemic.

The overall number of patients to whom we provided services in the U.S. in 2020 decreased by approximately 1.3% from 2019, primarily due to an increase in mortality rates, which have been impacted by the COVID-19 pandemic, and a decline in new admissions.

This was partially offset by new dialysis patients who started treating at our centers during the year from acquisitions and non-acquired growth.

*Medicare ESRD revenue*

Prior to January 2021, calcimimetics, a drug class taken by many patients with ESRD to treat mineral bone disorder, was separately billable through a transitional drug add-on payment adjustment (TDAPA); however, since January 1, 2021 and as described more fully below, calcimimetics has been included in the ESRD bundled payment.

On September 18, 2020, pursuant to the 2019 Executive Order, CMS, through CMMI, published the final ESRD Treatment Choices mandatory payment model (ETC).

The ETC launched on January 1, 2021, and will be administered through CMMI and in approximately 30% of dialysis clinics across the country.

The CARES Act that was signed into law on March 27, 2020 included a provision that suspended the 2% Medicare sequestration from May 1, 2020 through December 31, 2020, and the Consolidated Appropriations Act, 2021 signed into law on December 27, 2020 extended the suspension of the 2% Medicare sequestration until March 31, 2021.

In the year ended December 31, 2020, our revenues increased due to this suspension and we estimate that this suspension will increase our revenues while it remains in effect.

When Medicare becomes the primary payor, the payment rates we receive for

operations are reported as discontinued operations for all periods presented in the consolidated financial statements included in this report.

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and continuous cycling peritoneal dialysis (CCPD).

However, in 2019, the overall number of patients to whom we provided services in the U.S. increased by approximately 2.1% from 2018, primarily from the opening of new dialysis centers and acquisitions, and continued growth within the industry.

As of

January 1, 2018, calcimimetics became part of the Medicare Part B ESRD payment, subject to a transitional drug add-on payment adjustment (TDAPA).

Although the Bipartisan Budget Act (BBA) of 2018 passed in February 2018 enacted a two-year federal spending agreement and raised the federal spending cap on non-defense spending for fiscal years 2018 and 2019, the Medicare program is frequently mentioned as a target for spending cuts.

The impact of physician-prescribed pharmaceuticals on our overall revenues that are separately billable has significantly decreased since Medicare’s single bundled payment system went into effect beginning in January 2011, and as a result of commercial contracts that pay us a single bundled payment rate.

Previously, calcimimetics were reimbursed for Medicare patients through Part D and dispensed through traditional pharmacies.

CMS has stated intentions to enter calcimimetics into the ESRD bundled payment as of January 1, 2021.

As part of our Corporate Integrity Agreement, as described below, we agreed not to enforce investment non-compete restrictions relating to dialysis clinics or programs that were established pursuant to a partial divestiture joint venture transaction.

Therefore, to the extent a joint venture partner or medical director has a contract(s) with us covering dialysis clinics or programs that were established pursuant to a partial divestiture, we will not enforce the investment non-compete provision relating to those clinics and/or programs.

Typically we are able to increase our capacity by extending hours at our existing dialysis centers, expanding our existing dialysis centers, relocating our dialysis centers, developing new dialysis centers and by acquiring dialysis centers.

The development of a typical outpatient dialysis center by us generally requires approximately $2.4 million for leasehold improvements and other capital expenditures.

Based on our experience, a new outpatient dialysis center typically opens within a year after the property lease is signed, normally achieves operating profitability in the second year after Medicare certification and normally reaches maturity within three to five years.

Acquiring an existing outpatient dialysis center requires a substantially greater initial investment, but profitability and cash flows are generally accelerated and more predictable.

Of the remaining 44 non-consolidated U.S. outpatient dialysis centers, we own a noncontrolling interest in 41 centers and provide management and administrative services to three centers that are wholly-owned by third parties.

*Integrated Care and Chronic Kidney Care*.

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| *•* | *Disease management services.* VillageHealth DM, LLC doing business as DaVita Integrated Kidney Care (DaVita IKC) provides advanced integrated care management services to health plans and government programs for members/beneficiaries diagnosed with ESRD, chronic kidney failure, and/or poly-comorbid conditions. Through a combination of clinical coordination, innovative interventions, medical claims analysis and information technology, we endeavor to assist our customers and patients in obtaining superior renal healthcare and improved clinical outcomes, as well as helping to reduce overall medical costs. Integrated kidney care management revenues from commercial and Medicare Advantage insurers can be based upon either an established contract fee recognized as earned over the contract period, or related to the operation of value-based programs, including pay for performance, shared savings, and capitation contracts. DaVita IKC also contracts with payors to operate Medicare Advantage ESRD Special Needs Plans to provide ESRD patients full service healthcare. We are at risk for all medical costs of the program in excess of the capitation payments. Furthermore, in October 2015, DaVita IKC entered into |

management service agreements to support three ESCO joint ventures in which we are an investor through certain wholly- or majority-owned dialysis clinics.

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| • | *Physician services.* Nephrology Practice Solutions (NPS) is an independent business that partners with physicians committed to providing outstanding clinical and integrated care to patients. NPS provides nephrologist recruitment and staffing services in select markets which are billed on a per search basis. NPS also offers physician practice management services to nephrologists under administrative services agreements. These services include physician practice management, billing and collections, credentialing, coding, and other support services that enable physician practices to increase efficiency and manage their administrative needs. Additionally, NPS owns and operates nephrology practices in multiple states. Fees generated from these services are recognized as earned typically based upon flat fees or cash collections generated by the physician practice. |

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| • | *ESRD Seamless Care Organization joint ventures (ESCO JVs).* In October 2015, certain of our dialysis clinics entered into partnerships with various nephrology practices, health systems, and other providers to establish three ESCO JVs in Phoenix-Tucson Arizona, South Florida, and Philadelphia Pennsylvania-Camden, New Jersey. The ESCO JVs were formed under the CMS Innovation Center’s Comprehensive ESRD Care (CEC) Model, a demonstration to assess the impact of care coordination for ESRD patients in a dialysis-center oriented ACO setting. Each ESCO JV has a shared risk arrangement with CMS and the programs are evaluated on a performance year basis. The delivery of improved quality outcomes for patients and program savings depend on the contributions of the dialysis center teammates, nephrologists, health system and hospital partners, pharmacy providers, other primary care and specialty care providers and facilities, and integrated care management support from DaVita IKC, which is also the manager of the ESCO JVs. In 2019, CMS published the results for the 2017 performance year, and all three ESCO JVs earned shared savings payments. Results for 2018 and 2019 performance years are anticipated to be released in 2020. |

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| • | *Comprehensive care.* Vively Health (formerly known as DaVita Health Solutions) was created to provide comprehensive care through house calls and post-acute care programs to help chronically ill patients through use of community based, physician- and nurse practitioner-led care teams to deliver medical, behavioral, social and palliative care within the patient's home or skilled nursing facility. |

*Other Strategic Business Initiatives*

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| • | *Vascular access services.* Lifeline provides management and administrative services to physician-owned vascular access clinics that provide vascular services for dialysis and other patients. Lifeline is also the majority-owner of three vascular access clinics. Management fees generated from providing management and administrative services are recognized as earned typically based on a percentage of revenues or cash collections generated by the clinics. Revenues associated with the vascular access clinics that are majority-owned are recognized in the period when the services are provided. |

The information required by this Part I, Item 3 is incorporated herein by reference to the information set forth under the caption [removed: “Contingencies”] [added: “*Contingencies*”] in Note 16 to the consolidated financial statements included in this report.

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the Fiscal Year [removed: Ended December] [added: Ended December] 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number: 1-14106][added: Number: 1-14106]

[removed: ][added: ]

| Delaware | | [added: | | | |] 51-0354549 | [added: | |]

| (State of incorporation) | | [added: | | | |] (I.R.S. Employer Identification No.) | [added: | |]

| 2000 16th Street | | | [added: | | | | | |]

| Denver, | [added: | |] CO | [added: | |] 80202 | [added: | |]

Telephone number [removed: (720) 631-2100][added: (720) 631-2100]

| Title of each class: | | [added: | | | |] Trading symbol(s): | | [added: | | | |] Name of each exchange on which registered: | [added: | |]

| Common Stock, $0.001 par value | | [added: | | | |] DVA | | [added: | | | |] New York Stock Exchange | [added: | |]

Yes ☒ No [removed: ☐]

| Large accelerated filer | [added: | |] ☒ | | | [added: | | | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | | | [added: | | | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | | | [added: | | | | | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

As of June [removed: 28, 2019,] [added: 30, 2020,] the aggregate market value of the Registrant's common stock outstanding held by non-affiliates based upon the closing price on the New York Stock Exchange was approximately [removed: $9.3] [added: $9.7] billion.

As of January [removed: 31, 2020,] [added: 29, 2021,] the number of shares of the Registrant’s common stock outstanding was approximately [removed: 125.6] [added: 109.4] million shares.

Portions of the Registrant’s proxy statement for its [removed: 2020] [added: 2021] annual meeting of stockholders are incorporated by reference in Part III of this Form 10-K.

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| | | [added: | | | |] PART I. | | | [added: | | | | | |]

| Item 1. | | [removed: [Business](#s967C77CBE804541FAE5B78B764C16026)] | | [removed: [2](#s967C77CBE804541FAE5B78B764C16026)] | [added: | [Business](#i878840fee65247deaca27d2dd6a8246f_13) | | | | | | [2](#i878840fee65247deaca27d2dd6a8246f_13) | | |]

| Item 1A. | | [added: | | | |] [Risk [removed: Factors](#sF9ED48648A2E53949C4F8AE2A764D27F)] [added: Factors](#i878840fee65247deaca27d2dd6a8246f_55)] | | [removed: [23](#sF9ED48648A2E53949C4F8AE2A764D27F)] | [added: | | | [27](#i878840fee65247deaca27d2dd6a8246f_55) | | |]

| Item 1B. | | [added: | | | |] [Unresolved Staff [removed: Comments](#sF94374B1C14C5A71A12675698550A163)] [added: Comments](#i878840fee65247deaca27d2dd6a8246f_58)] | | [removed: [46](#sF94374B1C14C5A71A12675698550A163)] | [added: | | | [53](#i878840fee65247deaca27d2dd6a8246f_58) | | |]

| Item 2. | | [removed: [Properties](#s004ADE3AB2C85636A59424622190B2AA)] | | [removed: [46](#s004ADE3AB2C85636A59424622190B2AA)] | [added: | [Properties](#i878840fee65247deaca27d2dd6a8246f_61) | | | | | | [54](#i878840fee65247deaca27d2dd6a8246f_61) | | |]

| Item 3. | | [added: | | | |] [Legal [removed: Proceedings](#s6B228F9F93AF5D129BA2662F2BE3848F)] [added: Proceedings](#i878840fee65247deaca27d2dd6a8246f_64)] | | [removed: [47](#s6B228F9F93AF5D129BA2662F2BE3848F)] | [added: | | | [54](#i878840fee65247deaca27d2dd6a8246f_64) | | |]

| Item 4. | | [added: | | | |] [Mine Safety [removed: Disclosures](#sE5D4D39DFD3D539096DECA125C36DEBB)] [added: Disclosures](#i878840fee65247deaca27d2dd6a8246f_67)] | | [removed: [47](#sE5D4D39DFD3D539096DECA125C36DEBB)] | [added: | | | [54](#i878840fee65247deaca27d2dd6a8246f_67) | | |]

| | | [added: | | | |] PART II. | | | [added: | | | | | |]

| Item 5. | | [added: | | | |] [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s4D811B95B8F95A0DBD50A7583D678DC8)] [added: Securities](#i878840fee65247deaca27d2dd6a8246f_73)] | | [removed: [48](#s4D811B95B8F95A0DBD50A7583D678DC8)] | [added: | | | [55](#i878840fee65247deaca27d2dd6a8246f_73) | | |]

| Item 6. | | [added: | | | |] [Selected Financial [removed: Data](#s39BCAA2BB0E75675A1F62862F130B904)] [added: Data](#i878840fee65247deaca27d2dd6a8246f_76)] | | [removed: [49](#s39BCAA2BB0E75675A1F62862F130B904)] | [added: | | | [56](#i878840fee65247deaca27d2dd6a8246f_76) | | |]

| Item 7. | | [added: | | | |] [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s1597428E76FB51C587AB63BFD61C5D41)] [added: Operations](#i878840fee65247deaca27d2dd6a8246f_79)] | | [removed: [51](#s1597428E76FB51C587AB63BFD61C5D41)] | [added: | | | [58](#i878840fee65247deaca27d2dd6a8246f_79) | | |]

| Item 7A. | | [added: | | | |] [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s38318F8760D35DB988D6D18D219CE6B1)] [added: Risk](#i878840fee65247deaca27d2dd6a8246f_121)] | | [removed: [68](#s38318F8760D35DB988D6D18D219CE6B1)] | [added: | | | [78](#i878840fee65247deaca27d2dd6a8246f_121) | | |]

| Item 8. | | [added: | | | |] [Financial Statements and Supplementary [removed: Data](#s480C943D8500500CA3A7C39D0E3A537B)] [added: Data](#i878840fee65247deaca27d2dd6a8246f_124)] | | [removed: [69](#s480C943D8500500CA3A7C39D0E3A537B)] | [added: | | | [79](#i878840fee65247deaca27d2dd6a8246f_124) | | |]

| Item 9. | | [added: | | | |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sA0A32930C303552C84AB416D8CFF5683)] [added: Disclosure](#i878840fee65247deaca27d2dd6a8246f_127)] | | [removed: [69](#sA0A32930C303552C84AB416D8CFF5683)] | [added: | | | [79](#i878840fee65247deaca27d2dd6a8246f_127) | | |]

| Item 9A. | | [added: | | | |] [Controls and [removed: Procedures](#s6E1B9C47294053BA8DBE4E0BC0A93B4B)] [added: Procedures](#i878840fee65247deaca27d2dd6a8246f_130)] | | [removed: [69](#s6E1B9C47294053BA8DBE4E0BC0A93B4B)] | [added: | | | [79](#i878840fee65247deaca27d2dd6a8246f_130) | | |]

| Item 9B. | | [added: | | | |] [Other [removed: Information](#sF2732A2804135F5D97A333CA8378784B)] [added: Information](#i878840fee65247deaca27d2dd6a8246f_133)] | | [removed: [70](#sF2732A2804135F5D97A333CA8378784B)] | [added: | | | [79](#i878840fee65247deaca27d2dd6a8246f_133) | | |]

| | | [added: | | | |] PART III. | | | [added: | | | | | |]

| Item 10. | | [added: | | | |] [Directors, Executive Officers and Corporate [removed: Governance](#s615A4B3C8D3E56D59E743A90BCB6E075)] [added: Governance](#i878840fee65247deaca27d2dd6a8246f_139)] | | [removed: [71](#s615A4B3C8D3E56D59E743A90BCB6E075)] | [added: | | | [80](#i878840fee65247deaca27d2dd6a8246f_139) | | |]

| Item 11. | | [added: | | | |] [Executive [removed: Compensation](#s25E5C2CC924C5AC7A3642ED2EEB41BE1)] [added: Compensation](#i878840fee65247deaca27d2dd6a8246f_142)] | | [removed: [71](#s25E5C2CC924C5AC7A3642ED2EEB41BE1)] | [added: | | | [80](#i878840fee65247deaca27d2dd6a8246f_142) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its final report.

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[added: We lease five business offices located in California,] Pennsylvania, Tennessee and [added: Washington, as well as own one business office in] Washington for our U.S. dialysis business.

For our U.S. dialysis business we own the land and buildings for [removed: seven] [added: six] outpatient dialysis centers.

We also own [removed: 22] [added: 21] properties for development, including operating outpatient dialysis centers and properties we hold for sale.

The majority of our leases for our U.S. dialysis business cover periods from five years to [removed: 15] [added: 20] years and typically contain renewal options of five years to ten years at the fair rental value at the time of renewal.

Our outpatient dialysis centers range in size from approximately [removed: 900] [added: 1,000] to 33,000 square feet, with an average size of approximately [removed: 7,700] [added: 7,800] square feet.

Expansion of existing centers or relocation of our dialysis centers is subject to review for compliance with conditions relating to participation in the Medicare ESRD [removed: program.][added: program, among other things.]

We lease six business offices located in California,

The closing price of our common stock on January [removed: 31, 2020] [added: 29, 2021] was [removed: $79.87] [added: $117.37] per share.

According to Computershare, our registrar and transfer agent, as of January [removed: 31, 2020,] [added: 29, 2021,] there were [removed: 8,070] [added: 7,594] holders of record of our common stock.

[removed: We] [added: Our initial public offering was in 1994, and we] have not declared or paid cash dividends to holders of our common stock since [removed: 1994.][added: going public.]

We have no current plans to pay cash dividends and [removed: we] [added: there] are [removed: restricted from paying] [added: certain limitations on our ability to pay] dividends under the terms of our senior secured credit [removed: facilities and the indentures governing our senior notes.][added: facilities.]

See [removed: “Liquidity] [added: “*Liquidity] and capital [removed: resources”] [added: resources*”] under [removed: “Item] [added: Item] 7.

[removed: Management’s] [added: "*Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations”] [added: Operations*”] and the notes to the consolidated financial statements.

The following table summarizes our repurchases of our common stock during the fourth quarter of [removed: 2019:][added: 2020:]

| Period | [added: | |] Total number of shares purchased | | | [added: | | |] Average price paid per share | | | | [added: | |] Total number of shares purchased as part of publicly announced plans or programs | | | [added: | | |] Approximate dollar value of shares that may yet be purchased under the plans or programs | | |

| | [added: | |] (dollars and shares in thousands, except [removed: for] per share data) | | | | | | | | | | | | | [added: | | | | | | | |]

The following table summarizes our repurchases of our common stock during [removed: 2019:][added: 2020:]

| Period | [added: | |] Total number of shares purchased | | | [added: | | |] Average price paid per share | | | | [added: | |] Total number of shares purchased as part of publicly announced plans or programs | | | [added: | | |] Approximate dollar value of shares that may yet be purchased under the plans or programs | | |

| | [added: | |] (dollars and shares in thousands, except [removed: for] per share data) | | | | | | | | | | | | | [added: | | | | | | | |]

Effective [removed: July 17,] [added: as of the close of business on November 4,] 2019, the Board terminated all remaining prior share repurchase authorizations available to [removed: the Company at that time] [added: us] and approved a new share repurchase authorization of $2.0 billion.

Effective [removed: as of the close of business] on [removed: November 4, 2019,] [added: December 10, 2020,] the Board terminated all remaining prior share repurchase authorizations available to us under the aforementioned [removed: July 17,] [added: November 4,] 2019 authorization and approved a new share repurchase authorization of $2.0 billion.

As of February [removed: 20, 2020,] [added: 10, 2021,] we have a total of [removed: $1.68] [added: $1.807] billion available under the current repurchase authorization for additional share repurchases.

Although this share repurchase authorization does not have an expiration date, we remain subject to share repurchase limitations, including under the terms of our senior secured credit [removed: facilities and the indentures governing our senior notes.][added: facilities.]

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1-31, 2020 | | | 1,828 | | | | | | $ | 87.96 | | | | | 1,828 | | | | | | $ | 515,926 | |

| November 1-30, 2020 | | | 1,149 | | | | | | 105.54 | | | | | | 1,149 | | | | | | $ | 394,628 | |

| December 1-31, 2020 | | | 1,216 | | | | | | 111.91 | | | | | | 1,216 | | | | | | $ | 1,929,955 | |

| Total | | | 4,193 | | | | | | $ | 99.73 | | | | | 4,193 | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| January 1 - March 31, 2020 | | | 4,052 | | | | | | $ | 74.81 | | | | | 4,052 | | | | | | $ | 1,400,356 | |

| April 1 - June 30, 2020 | | | — | | | | | | — | | | | | | — | | | | | | $ | 1,400,356 | |

| July 1 - September 30, 2020(1) | | | 8,232 | | | | | | 88.13 | | | | | | 8,232 | | | | | | $ | 676,709 | |

| October 1 - December 31, 2020 | | | 4,193 | | | | | | 99.73 | | | | | | 4,193 | | | | | | $ | 1,929,955 | |

| Total | | | 16,477 | | | | | | $ | 87.80 | | | | | 16,477 | | | | | | | | |

(1)The total number of shares purchased and the aggregate amount paid for shares repurchased include shares repurchased pursuant to our modified Dutch auction tender offer at a clearing price of $88.00 per share plus related fees and expenses of $2.5 million.

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| October 1-31, 2019 | 4,028 | | | $ | 57.13 | | | 4,028 | | | $ | 261,792 | |

| November 1-30, 2019 | 1,407 | | | 69.41 | | | | 1,407 | | | $ | 1,918,055 | |

| December 1-31, 2019 | 2,934 | | | 73.13 | | | | 2,934 | | | $ | 1,703,495 | |

| Total | 8,369 | | | $ | 64.80 | | | 8,369 | | | | | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| January 1 - March 31, 2019 | — | | | $ | — | | | — | | | $ | 1,355,605 | |

| April 1 - June 30, 2019 | 2,060 | | | 54.46 | | | | 2,060 | | | $ | 1,243,416 | |

| July 1 - September 30, 2019 | 30,592 | | | 57.14 | | | | 30,592 | | | $ | 491,917 | |

| October 1 - December 31, 2019 | 8,369 | | | 64.80 | | | | 8,369 | | | $ | 1,703,495 | |

| Total | 41,020 | | | $ | 58.57 | | | 41,020 | | | | | |

On July 11, 2018, our Board of Directors approved an additional share repurchase authorization in the amount of approximately $1.39 billion.

This share repurchase authorization was in addition to the approximately $110 million remaining at that time under our Board of Directors’ prior share repurchase authorization approved in October 2017.

The following financial and operating data should be read in conjunction with [removed: “Item] [added: Item] 7.

[removed: Management’s] [added: "*Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations”] [added: Operations*”] and our consolidated financial statements filed as part of this report.

| | [added: | |] Year ended December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| | [added: | |] (dollars and shares in thousands, except per share data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Income statement data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Total revenues(1) | [added: | |] $ | [removed: 11,388,479] [added: 11,550,604] | | | [added: | |] $ | [removed: 11,404,851] [added: 11,388,479] | | | [added: | |] $ | [removed: 10,876,634] [added: 11,404,851] | | | [added: | |] $ | [removed: 10,707,467] [added: 10,876,634] | | | [added: | |] $ | [removed: 9,982,245] [added: 10,707,467] | |

| Operating expenses and charges(2) | [added: | | 9,855,968 | | | | | |] 9,745,162 | | | | [added: | |] 9,879,027 | | | | [removed: 9,063,879] | | [added: 9,063,879] | | [removed: 8,677,757] | | | | [removed: 8,845,479] [added: 8,677,757] | | |

| Operating income | [added: | | 1,694,636 | | | | | |] 1,643,317 | | | | [added: | |] 1,525,824 | | | | [removed: 1,812,755] | | [added: 1,812,755] | | [removed: 2,029,710] | | | | [removed: 1,136,766] [added: 2,029,710] | | |

| Debt expense | [removed: (443,824] | | [removed: )] [added: (304,111)] | | [removed: (487,435] | | [removed: )] | | [removed: (430,634] [added: (443,824)] | | [removed: )] | | [removed: (414,116] | | [removed: )] [added: (487,435)] | | [removed: (408,380] | | [removed: )] | [added: | (430,634) | | | | | | (414,116) | | |]

| Debt prepayment, refinancing and redemption charges | [removed: (33,402] | | [removed: )] [added: (89,022)] | | [removed: —] | | | | [added: (33,402) | | | | | |] — | | | | [added: | |] — | | | | [removed: (48,072] | | [removed: )] [added: —] | [added: | |]

| Other income, net | [added: | | 16,759 | | | | | |] 29,348 | | | | [added: | |] 10,089 | | | | [removed: 17,665] | | [added: 17,665] | | [removed: 7,511] | | | | [removed: 8,073] [added: 7,511] | | |

| Income from continuing operations before income taxes | [added: | | 1,318,262 | | | | | |] 1,195,439 | | | | [added: | |] 1,048,478 | | | | [removed: 1,399,786] | | [added: 1,399,786] | | [removed: 1,623,105] | | | | [removed: 688,387] [added: 1,623,105] | | |

| Income tax expense(3) | [added: | | 313,932 | | | | | |] 279,628 | | | | [added: | |] 258,400 | | | | [removed: 323,859] | | [added: 323,859] | | [removed: 431,761] | | | | [removed: 207,510] [added: 431,761] | | |

| Net income from continuing operations | [added: | | 1,004,330 | | | | | |] 915,811 | | | | [added: | |] 790,078 | | | | [removed: 1,075,927] | | [added: 1,075,927] | | [removed: 1,191,344] | | | | [removed: 480,877] [added: 1,191,344] | | |

| Net (loss) income from discontinued operations, net of tax(4) | [added: | | (9,653) | | | | | |] 105,483 | | | | [removed: (457,038] | | [removed: )] [added: (457,038)] | | [removed: (245,372] | | [removed: )] | | [removed: (158,262] [added: (245,372)] | | [removed: )] | | [removed: (53,467] | | [removed: )] [added: (158,262)] | [added: | |]

| Net income | [added: | | 994,677 | | | | | |] 1,021,294 | | | | [added: | |] 333,040 | | | | [removed: 830,555] | | [added: 830,555] | | [removed: 1,033,082] | | | | [removed: 427,410] [added: 1,033,082] | | |

| Less: Net income attributable to noncontrolling interests | [removed: (210,313] | | [removed: )] [added: (221,035)] | | [removed: (173,646] | | [removed: )] | | [removed: (166,937] [added: (210,313)] | | [removed: )] | | [removed: (153,208] | | [removed: )] [added: (173,646)] | | [removed: (157,678] | | [removed: )] | [added: | (166,937) | | | | | | (153,208) | | |]

| Net income attributable to DaVita Inc. | [added: | |] $ | [removed: 810,981] [added: 773,642] | | | [added: | |] $ | [removed: 159,394] [added: 810,981] | | | [added: | |] $ | [removed: 663,618] [added: 159,394] | | | [added: | |] $ | [removed: 879,874] [added: 663,618] | | | [added: | |] $ | [removed: 269,732] [added: 879,874] | |

| Basic income from continuing [removed: operations per share attributable to DaVita Inc.(5)] [added: operations(5)] | [added: | |] $ | [removed: 4.61] [added: 6.54] | | | [added: | |] $ | [removed: 3.66] [added: 4.61] | | | [added: | |] $ | [removed: 4.78] [added: 3.66] | | | [added: | |] $ | [removed: 5.12] [added: 4.78] | | | [added: | |] $ | [removed: 1.53] [added: 5.12] | |

| Diluted income from continuing [removed: operations per share attributable to DaVita Inc.(5)] [added: operations(5)] | [added: | |] $ | [removed: 4.60] [added: 6.39] | | | [added: | |] $ | [removed: 3.62] [added: 4.60] | | | [added: | |] $ | [removed: 4.71] [added: 3.62] | | | [added: | |] $ | [removed: 5.04] [added: 4.71] | | | [added: | |] $ | [removed: 1.49] [added: 5.04] | |

| Basic [added: shares] | [added: | | 119,797 | | | | | |] 153,181 | | | | [added: | |] 170,786 | | | | [removed: 188,626] | | [added: 188,626] | | [removed: 201,641] | | | | [removed: 211,868] [added: 201,641] | | |

| Diluted [added: shares] | [added: | | 122,623 | | | | | |] 153,812 | | | | [added: | |] 172,365 | | | | [removed: 191,349] | | [added: 191,349] | | [removed: 204,905] | | | | [removed: 216,252] [added: 204,905] | | |

| Balance sheet data (as of period end): | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Working capital | [added: | |] $ | [removed: 1,318,072] [added: 672,581] | | | [added: | |] $ | [removed: 3,532,998] [added: 1,318,072] | | | [added: | |] $ | [removed: 5,703,181] [added: 3,532,998] | | | [added: | |] $ | [removed: 1,283,784] [added: 5,703,181] | | | [added: | |] $ | [removed: 2,104,143] [added: 1,283,784] | |

| Total assets | [added: | |] $ | [removed: 17,311,394] [added: 16,988,516] | | | [added: | |] $ | [removed: 19,110,252] [added: 17,311,394] | | | [added: | |] $ | [removed: 18,974,536] [added: 19,110,252] | | | [added: | |] $ | [removed: 18,755,776] [added: 18,974,536] | | | [added: | |] $ | [removed: 18,524,224] [added: 18,755,776] | |

| Long-term debt | [added: | |] $ | [removed: 7,977,526] [added: 7,917,263] | | | [added: | |] $ | [removed: 8,172,847] [added: 7,977,526] | | | [added: | |] $ | [removed: 9,158,018] [added: 8,172,847] | | | [added: | |] $ | [removed: 8,944,676] [added: 9,158,018] | | | [added: | |] $ | [removed: 9,000,482] [added: 8,944,676] | |

| Total DaVita Inc. shareholders' equity(5) | [added: | |] $ | [removed: 2,133,409] [added: 1,383,566] | | | [added: | |] $ | [removed: 3,703,442] [added: 2,133,409] | | | [added: | |] $ | [removed: 4,690,029] [added: 3,703,442] | | | [added: | |] $ | [removed: 4,648,047] [added: 4,690,029] | | | [added: | |] $ | [removed: 4,870,781] [added: 4,648,047] | |

[removed: | (1) | On] [added: (1)On] January 1, 2018, we adopted *Revenue from Contracts with Customers* (Topic 606) using the cumulative effect method for those contracts that were not substantially completed as of January 1, 2018. [removed: See Notes 1 and 2 of the consolidated financial statements for further discussion of our adoption of Topic 606. |]

[removed: | (2) | The] [added: (2)The] following table summarizes [removed: impairment charges, gain] [added: losses (gains)] on changes in ownership interest, [added: net, accruals for] legal [removed: matters accrual and settlement] [added: matters, impairment] charges, restructuring charges and gain on settlement included in operating expenses and charges: [removed: |]

| | [added: | |] Year ended December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| | [removed: (in] [added: | | (dollars in] thousands) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Certain operating expenses and charges: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Impairment charges | [added: | | | | | | | |] $ | 124,892 | | | [added: | |] $ | 27,969 | | | [removed: $] | [removed: 336,223] | [added: $] | [added: 336,223] | [removed: $] | [removed: 43,408] | | | $ | [removed: 4,066] [added: 43,408] | |

| [removed: Gain] [added: Loss (gain)] on changes in ownership interests, net | | | [added: $] | [added: 16,252] | [removed: $] | [removed: (51,888] | [removed: )] | | [added: | | | | | |] $ | [removed: (6,273] [added: (51,888)] | [removed: )] | | [added: | |] $ | [removed: (374,374] [added: (6,273)] | [removed: )] | | | | [added: $] | [added: (374,374) | |]

| Restructuring charges | | | | | [added: | | | | | | | | | |] $ | 11,366 | | | [removed: $] | [removed: 2,700] | [added: $] | [added: 2,700] | | | | | | | |

| Gain on settlement | | | | | | | | | [removed: $] | [removed: (529,504] | [removed: )] | | | | | | | | | [added: | $ | (529,504) | | | | | | | |]

[removed: | (3) | Tax] [added: (3)Tax] expense for 2017 included a net tax benefit of $251,510 related to U.S. tax legislation passed in December 2017. [removed: |]

[removed: | (4) | On] [added: (4)On] June 19, 2019, we completed the sale of our DMG business to Collaborative Care Holdings, LLC (Optum), a subsidiary of UnitedHealth Group Inc. Accordingly, DMG's results of operations are reported as net income (loss) from discontinued operations, net of [removed: tax for all periods presented and its assets and liabilities were classified as held for sale for the periods reported prior to close of the transaction. |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Earnings per share attributable to DaVita Inc.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Weighted average shares for earnings per share(5): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

See Notes 1 and 2 of the consolidated financial statements for further discussion of our adoption of Topic 606.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Accruals for legal matters | | | $ | 35,000 | | | | | | | | | | | | | | | | | | | | | | | $ | 15,770 | |

tax for all periods presented and its assets and liabilities were classified as held for sale for the periods reported prior to close of the transaction.

(5)The following table summarizes our common stock activity:

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Year ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| | | | (dollars and shares in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Share repurchases: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Shares | | | 16,477 | | | | | | 41,020 | | | | | | 16,844 | | | | | | 12,967 | | | | | | 16,649 | | |

| Amounts paid | | | $ | 1,446,767 | | | | | $ | 2,402,475 | | | | | $ | 1,153,511 | | | | | $ | 810,949 | | | | | $ | 1,072,377 | |

| Shares issued: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Stock purchase plan | | | 222 | | | | | | 315 | | | | | | 398 | | | | | | 360 | | | | | | 438 | | |

| Stock award plans | | | 345 | | | | | | 161 | | | | | | 371 | | | | | | 514 | | | | | | 1,011 | | |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| Weighted average shares outstanding:(5) | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

| | |

| --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| Legal matters accrual and settlement charges | | | | | | | | | | | | | $ | 15,770 | | | $ | 517,530 | |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| (5) | Share repurchases consisted of 41,020 shares of common stock for $2,402,475 in 2019, 16,844 shares of common stock for $1,153,511 in 2018, 12,967 shares of common stock for $810,949 in 2017, 16,649 shares of common stock for $1,072,377 in 2016, and 7,780 shares of common stock for $575,380 in 2015. Shares issued in connection with stock awards were 161 in 2019, 371 in 2018, 514 in 2017, 1,011 in 2016, and 1,479 in 2015. |

See the Index to Financial Statements and Index to Financial Statement Schedules included at [removed: “Item 15.][added: Item 15, "*Exhibits, Financial Statement Schedules.*”]

Exhibits, Financial Statement Schedules.”

Management has established and maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that it files or submits pursuant to the Securities Exchange Act of 1934 (Exchange Act) as amended is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our Chief Executive Officer [added: ("CEO")] and Chief Financial Officer [added: ("CFO")] as appropriate to allow for timely decisions regarding required disclosures.

At the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our [removed: Chief Executive Officer] [added: CEO] and [removed: Chief Financial Officer,] [added: CFO,] of the effectiveness of the design and operation of [removed: our] [added: the Company's] disclosure controls and procedures in accordance with the Exchange Act [removed: requirements.][added: requirements as of December 31, 2020.]

Based upon that evaluation, the [removed: Chief Executive Officer] [added: CEO] and [removed: Chief Financial Officer] [added: CFO] concluded that [removed: our] [added: the Company's] disclosure controls and procedures [removed: are] [added: were] effective [removed: for timely identification and review of material information] [added: as] required [removed: to be included in] [added: by the Exchange Act as of such date for] our Exchange Act reports, including this report.

There was no [removed: other] change in [removed: our] [added: the Company's] internal control over financial reporting that was identified during the evaluation that occurred during the fourth fiscal quarter of [removed: 2019] [added: 2020] that has materially affected, or is reasonably likely to materially affect, the [removed: Company’s] [added: Company's] internal control over financial reporting.

Beginning January 1, 2019, we adopted FASB Accounting Standards Codification Topic 842, *Leases*.

As a result of adopting this new standard, we implemented new business processes and related control activities in order to maintain appropriate controls over financial reporting.

The other information required to be disclosed by this item will appear in, and is incorporated by reference from, the sections entitled [removed: “Proposal] [added: “*Proposal] 1 Election of [removed: Directors”, “Corporate Governance”,] [added: Directors*”, “*Corporate Governance*”,] and [removed: “Security] [added: “*Security] Ownership of Certain Beneficial Owners and [removed: Management”] [added: Management*”] to be included in our definitive proxy statement relating to our [removed: 2020] [added: 2021] annual stockholder meeting.