Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking statements

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

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

*•*the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates; a reduction in the number or percentage of our patients under commercial plans, including, without limitation, as a result of continuing legislative efforts to restrict or prohibit the use and/or availability of charitable premium assistance, or as a result of payors implementing restrictive plan designs;

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

*•*our ability to successfully implement our strategies with respect to IKC and VBC initiatives and home based dialysis in the desired time frame and in a complex, dynamic and highly regulated environment;

*•*a reduction in government payment rates under the Medicare End Stage Renal Disease program, state Medicaid or other government-based programs and the impact of the MA benchmark structure;

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

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

*•*legal and compliance risks, such as compliance with complex, and at times, evolving government regulations and requirements, and with additional laws that may apply to our operations as we expand geographically or enter into new lines of business;

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

*•*changes in pharmaceutical practice patterns, reimbursement and payment policies and processes, or pharmaceutical pricing, including with respect to oral phosphate binders, among other things;

*•*our ability to develop and maintain relationships with physicians and hospitals, changing affiliation models for physicians, and the emergence of new models of care or other initiatives that, among other things, may erode our patient base and impact reimbursement rates;

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

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

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

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

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

*•*the other risk factors, trends and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 10-K), and the risks and uncertainties discussed in any subsequent reports that we file or furnish with the Securities and Exchange Commission (SEC) from time to time.

The following should be read in conjunction with our condensed consolidated financial statements.

Company Overview

Our principal business is to provide dialysis and related lab services to patients in the United States, which we refer to as our U.S. dialysis business. We also operate our U.S. integrated kidney care (IKC) business, our U.S. other ancillary services, and our international operations, which we collectively refer to as our ancillary services, as well as our corporate administrative support functions. 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 (ESRD) or end stage kidney disease (ESKD).

External Conditions

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

In the second quarter of 2025, treatment per day volumes increased compared to the first quarter. For the full year to date, we have experienced a negative impact on revenue and treatment volume due to, among other things, the cybersecurity incident described below, an elevated number of missed treatments and a particularly severe flu season. Admission rates, treatment volumes, future revenues and non-acquired growth, among other things, could continue to be negatively impacted over time to the extent that the ESKD and CKD populations experience sustained elevated mortality levels. These mortality levels could be influenced by, among other things, the impact of infectious diseases on our patient population and the availability and use of vaccines, treatments and therapies as described in Part I Item 1A. "Risk Factors" of our 2024 10-K, and the magnitude of these cumulative impacts could have a material adverse impact on our results of operations, financial condition and cash flows.

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

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

Legislative and Regulatory Developments

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA includes numerous provisions that may impact our business, including, among other things, changes that affect Medicaid programs and programs under the Patient Protection and Affordable Care Act and the Health Care Reconciliation Act of 2010, as amended (collectively, the ACA). OBBBA provisions include planned phasing down of federal Medicaid expenditures by introducing work requirements for certain "able-bodied" adult beneficiaries, higher cost-sharing for certain patients, and limitations on state funding mechanisms, known as provider taxes and state-directed payments.

OBBBA did not address the enhanced premium tax credits for individuals who purchase health insurance through the ACA exchanges. As a result, these enhanced premium tax credits, which were initially established under the American Rescue Plan and Inflation Reduction Act of 2022 are set to expire at the end of 2025. The expiration of these enhanced premium tax

credits and other changes to the ACA exchanges likely would reduce enrollment in health insurance on marketplaces developed under the ACA and may lead to a decrease in the number of patients with higher-paying commercial health insurance. In the event such a decrease occurs, it would have an adverse impact on our business, results of operations, financial condition and cash flows.

We and other health care participants expect additional federal and state guidance to implement the OBBBA provisions in the future, with several of these provisions having effective dates in 2027 and 2028. We are continuing to assess the potential impact of the law as well as other federal and state legislative and regulatory efforts on our business. For additional information regarding OBBBA's potential impact, including as it relates to federal funding of government programs, the expiration of enhanced premium tax credits, and related regulatory developments, see Part I Item 1. "Business—Government Regulation" and Part I Item 1A. "Risk Factors" of our 2024 Form 10-K.

Cybersecurity Incident

As previously disclosed, on April 12, 2025, we became aware of a cybersecurity incident that impacted certain elements of our network. While the incident disrupted our operations, we have continued dialysis care and have restored all major functions.

We are aware of the exfiltration of certain data as part of the cybersecurity incident, including certain Personally Identifiable Information (PII) and/or Protected Health Information (PHI) from our DaVita Laboratory line of business. We started the notice process on August 1, 2025, giving notice to applicable regulators, and potentially involved patients, former patients and the estates of former patients as well as public notice, including providing information on https://davitasystemsoutage.com. The contents of this website are not incorporated by reference into this report.

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

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

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

Financial Results

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

Consolidated results of operations

The following tables summarize our revenues, operating income (loss) and adjusted operating income (loss) by line of business. See the discussion of our results for each line of business following the tables. When multiple drivers are identified in the following discussion of results, they are listed in order of magnitude:

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions)
Revenues:
U.S. dialysis$2,913$2,823$903.2%
Other — Ancillary services4864157117.1%
Elimination of intersegment revenues(20)(14)(6)(42.9)%
Total consolidated revenues$3,380$3,224$1564.8%
Operating income (loss):
U.S. dialysis$523$476$479.9%
Other — Ancillary services57(3)602,000.0%
Corporate administrative support(42)(34)(8)(23.5)%
Operating income$538$439$9922.6%
Adjusted operating income (loss)(1):
U.S. dialysis$536$476$6012.6%
Other — Ancillary services57(3)602,000.0%
Corporate administrative support(42)(34)(8)(23.5)%
Adjusted operating income$551$439$11225.5%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)For a reconciliation of adjusted operating income (loss) by reportable segment, see the "Reconciliations of Non-GAAP measures" section below.

Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions)
Revenues:
U.S. dialysis$5,737$5,597$1402.5%
Other — Ancillary services90170419728.0%
Elimination of intersegment revenues(34)(44)1022.7%
Total consolidated revenues$6,603$6,257$3465.5%
Operating income (loss):
U.S. dialysis$999$1,076$(77)(7.2)%
Other — Ancillary services54(30)84280.0%
Corporate administrative support(76)(56)(20)(35.7)%
Operating income$977$990$(13)(1.3)%
Adjusted operating income (loss)(1):
U.S. dialysis$1,012$1,041$(29)(2.8)%
Other — Ancillary services54(30)84280.0%
Corporate administrative support(76)(56)(20)(35.7)%
Adjusted operating income$990$955$353.7%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)For a reconciliation of adjusted operating income (loss) by reportable segment, see the "Reconciliations of Non-GAAP measures" section below.

U.S. dialysis results of operations

Treatment volume:

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
Dialysis treatments7,186,2177,040,519145,6982.1%
Average treatments per day92,13191,7933380.4%
Treatment days78.076.71.31.7%
Normalized non-acquired treatment growth(1)(0.8)%(0.6)%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)Normalized non-acquired treatment growth reflects year over year growth in treatment volume, adjusted to exclude acquisitions and other similar transactions, and further adjusted to normalize for the number and mix of treatment days in a given quarter versus the prior year quarter.

Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
Dialysis treatments14,226,73614,416,956(190,220)(1.3)%
Average treatments per day91,96392,654(691)(0.7)%
Treatment days154.7155.6(0.9)(0.6)%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

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

Revenues:

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions, except per treatment data)
Total revenues$2,913$2,823$903.2%
Average patient service revenue per treatment$404.58$400.14$4.441.1%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions, except per treatment data)
Total revenues$5,737$5,597$1402.5%
Average patient service revenue per treatment$402.38$387.40$14.983.9%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

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

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

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

In June 2025, Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update the Medicare ESRD PPS payment rate and policies for calendar year 2026. CMS estimates that the overall impact of the proposed rule will increase ESRD freestanding facilities’ average reimbursement by 1.9% in 2026.

Operating expenses and charges:

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions, except per treatment data)
Patient care costs$1,928$1,913$150.8%
General and administrative3122832910.2%
Depreciation and amortization157157——%
Equity investment income(7)(6)(1)(16.7)%
Total operating expenses and charges$2,391$2,347$441.9%
Patient care costs per treatment$268.36$271.77$(3.41)(1.3)%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions, except per treatment data)
Patient care costs$3,842$3,679$1634.4%
General and administrative595556397.0%
Depreciation and amortization314333(19)(5.7)%
Equity investment income(12)(12)——%
Gain on changes in ownership interests—(35)35100.0%
Total operating expenses and charges$4,738$4,521$2174.8%
Patient care costs per treatment$270.05$255.19$14.865.8%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

Charges impacting operating income - Cybersecurity incident-related charges. During the second quarter of 2025, we experienced a cybersecurity incident that impacted certain elements of our network and resulted in a temporary disruption of our operations, as described above. As a result, during the second quarter of 2025 we incurred charges of approximately $13.5 million, which increased our patient care costs by $1.0 million and general and administrative expenses by $12.5 million to remediate the incident and restore systems with the assistance of third-party cybersecurity professionals. These costs do not include the impact related to business interruption on our results.

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

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

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

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

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

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

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

Gain on changes in ownership interests. During the first quarter of 2024, we acquired a controlling interest in a previously nonconsolidated dialysis partnership for which we recognized a non-cash gain of $35.1 million on our prior investment upon consolidation.

Operating income and adjusted operating income:

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions)
Operating income$523$476$479.9%
Adjusted operating income(1)$536$476$6012.6%
Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions)
Operating income$999$1,076$(77)(7.2)%
Adjusted operating income(1)$1,012$1,041$(29)(2.8)%

(1)For a reconciliation of adjusted operating income by reportable segment, see the "Reconciliations of Non-GAAP measures" section below.

U.S. dialysis operating income for the second quarter of 2025 compared to the first quarter of 2025 was negatively impacted by the cybersecurity incident-related charges described above. U.S. dialysis operating income and adjusted operating income for the second quarter of 2025 increased compared to the first quarter of 2025 as a result of all factors discussed above.

U.S. dialysis operating income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was negatively impacted by the cybersecurity incident-related charges in the second quarter of 2025 and gain on changes in ownership interests in the first quarter of 2024, each described above. U.S. dialysis operating income and adjusted operating income for the six months ended June 30, 2025 decreased compared to the six months ended June 30, 2024 as a result of the factors discussed above.

Other—Ancillary services

Our other operations include ancillary services that are primarily aligned with our core business of providing dialysis services to our network of patients. As of June 30, 2025, these consisted principally of our U.S. IKC business, certain U.S. other ancillary businesses (including our clinical research programs, transplant software business, and venture investment group), and our international operations. In the first quarter of 2025, we reallocated the revenues and costs associated with an internal software product from the U.S. IKC business to the U.S. other ancillary business. Prior periods have been recast to reflect this change.

As of June 30, 2025, DaVita IKC provided integrated care and disease management services to approximately 64,400 patients in risk-based integrated care arrangements and to an additional 9,300 patients in other integrated care arrangements. We also expect to add additional service offerings to our business and pursue additional strategic initiatives in the future as circumstances warrant, which could include, among other things, healthcare services not related to kidney disease.

For a discussion of the risks related to IKC and our ancillary services, see the discussion in the risk factors in Part I Item 1A. "Risk Factors" of our 2024 10-K under the headings, "The U.S. integrated kidney care, U.S. other ancillary services and international operations that we operate or invest in now or in the future..." and "If we are not able to successfully implement our strategy with respect to our integrated kidney care and value-based care initiatives..."

As of June 30, 2025, our international dialysis operations provided dialysis and administrative services through a total of 513 outpatient dialysis centers located in 13 countries outside of the United States.

Ancillary services results of operations

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions)
Revenues:
U.S. IKC$152$105$4744.8%
U.S. other ancillary87114.3%
International325302237.6%
Total ancillary services revenues$486$415$7117.1%
Operating income (loss)
U.S. IKC$26$(29)$55189.7%
U.S. other ancillary(5)(4)(1)(25.0)%
International3630620.0%
Total ancillary services operating income (loss)$57$(3)$602,000.0%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions)
Revenues:
U.S. IKC$258$228$3013.2%
U.S. other ancillary161516.7%
International62746116636.0%
Total ancillary services revenues$901$704$19728.0%
Operating income (loss)
U.S. IKC$(3)$(51)$4894.1%
U.S. other ancillary(10)(12)216.7%
International(1)673334103.0%
Total ancillary services operating income (loss)$54$(30)$84280.0%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)The reported operating income for the six months ended June 30, 2024 includes foreign currency gains embedded in equity method income recognized from our Asia Pacific (APAC) joint venture, which was consolidated in the fourth quarter of 2024, of approximately $1.9 million.

Operating income (loss) and adjusted operating income (loss)

IKC operating income for the second quarter of 2025 compared to IKC operating loss for the first quarter of 2025 was primarily driven by a net increase in shared savings and decreased medical claims expense related to our special needs plans. IKC operating loss for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 decreased, primarily due to a net increase in shared savings and increased revenues related to our special needs plans, partially offset by decreased revenues related to the divestiture of our physician services business in 2024. IKC operating loss was also impacted by decreased medical claims expense related to our special needs plans and operating expenses related to the divestiture of our physician services business in 2024, partially offset by increased professional fees.

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

International operating income for the second quarter of 2025 compared to the first quarter of 2025 was impacted by favorable changes in the fair value of contingent consideration associated with a prior acquisition and non-acquired treatment growth. International operating income for the six months ended June 30, 2025 increased compared to the six months ended June 30, 2024 primarily driven by acquired and non-acquired treatment growth and favorable changes related to the fair value of contingent consideration associated with a prior acquisition, partially offset by decreased equity income resulting from fluctuations in foreign currency at our APAC joint venture, which was consolidated in the fourth quarter of 2024.

Corporate administrative support

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions)
Corporate administrative support$(42)$(34)$(8)(23.5)%
Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions)
Corporate administrative support$(76)$(56)$(20)(35.7)%

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

Corporate-level charges

Three months endedQ2 2025 vs. Q1 2025
June 30, 2025March 31, 2025AmountPercent
(dollars in millions)
Debt expense$146$135$118.1%
Weighted average effective interest rate(1)5.71%5.60%0.11%
Other loss, net$23$18$527.8%
Effective income tax rate25.4%18.9%6.5%
Effective income tax rate attributable to DaVita Inc.(2)31.9%24.9%7.0%
Net income attributable to noncontrolling interests$76$69$710.1%

(1)Represents our overall weighted average effective interest rate on all debt, including the effect of interest rate caps and amortization of debt discount, premium and deferred financing charges.

(2)For a reconciliation of our effective income tax rate attributable to DaVita Inc., see the "Reconciliations of Non-GAAP measures" section below.

Six months endedYTD Q2 2025 vs. YTD Q2 2024
June 30, 2025June 30, 2024AmountPercent
(dollars in millions)
Debt expense$281$197$8442.6%
Debt extinguishment and modification costs$—$10$(10)(100.0)%
Weighted average effective interest rate(1)5.66%4.39%1.27%
Other loss, net$40$40$——%
Effective income tax rate22.6%18.5%4.1%
Effective income tax rate attributable to DaVita Inc.(2)28.9%22.9%6.0%
Net income attributable to noncontrolling interests$145$143$21.4%

(1)Represents our overall weighted average effective interest rate on all debt, including the effect of interest rate caps and amortization of debt discount, premium and deferred financing charges.

(2)For a reconciliation of our effective income tax rate attributable to DaVita Inc., see the "Reconciliations of Non-GAAP measures" section below.

Debt expense

Debt expense for the second quarter of 2025 compared to the first quarter of 2025 increased due to an increase in our long-term debt balance primarily related to the second quarter 2025 issuance of the 6.75% senior notes due 2033 (the 6.75% Senior Notes) and an increase in our weighted average effective interest rate. Debt expense for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 increased primarily due to an increase in our weighted average effective interest rate principally related to the expiration of our 2019 interest rate cap agreements on June 30, 2024, which had lower rates than our currently effective interest rate caps. This change was also driven by an increase in our long-term debt balance primarily related to the second quarter 2025 issuance of the 6.75% Senior Notes and third quarter 2024 issuance of 6.875% senior notes due 2032.

Other loss, net

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

Effective income tax rate

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

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

Net income attributable to noncontrolling interests

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

U.S. dialysis accounts receivable

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

Liquidity and capital resources

The following table summarizes our major sources and uses of cash, cash equivalents and restricted cash:

Six months ended June 30,YTD Q2 2025 vs. YTD Q2 2024
20252024AmountPercent
(dollars in millions and shares in thousands)
Net cash provided by operating activities:
Net income$507$606$(99)(16.3)%
Non-cash items in net income459422378.8%
Other working capital changes(453)(353)(100)(28.3)%
Other(9)(10)110.0%
$504$664$(160)(24.1)%
Net cash used in investing activities:
Maintenance capital expenditures(1)$(185)$(171)$(14)(8.2)%
Development capital expenditures(2)(80)(74)(6)(8.1)%
Acquisition expenditures(11)(158)14793.0%
Proceeds from sale of self-developed properties21912133.3%
Other2518738.9%
$(229)$(377)$14839.3%
Net cash used in financing activities:
Debt issuances, net$815$600$21535.8%
Deferred and debt-related financing costs(25)(20)(5)(25.0)%
Distributions to noncontrolling interests(151)(107)(44)(41.1)%
Contributions from noncontrolling interests38(5)(62.5)%
Stock award exercises and other share issuances(22)(86)6474.4%
Share repurchases(994)(613)(381)(62.2)%
Other(4)(26)2284.6%
$(378)$(244)$(134)(54.9)%
Total number of shares repurchased6,7274,7741,95340.9%
Free cash flow(3)$112$327$(215)(65.7)%

Certain columns or rows may not sum due to the presentation of rounded numbers.

(1)Maintenance capital expenditures represent capital expenditures to maintain the productive capacity of the business and include those made for investments in information technology, dialysis center renovations, capital asset replacements, and any other capital expenditures that are not development or acquisition expenditures.

(2)Development capital expenditures principally represent capital expenditures (other than acquisition expenditures) made to expand the productive capacity of the business and include those for new U.S. and international dialysis center developments, dialysis center expansions and relocations, and new or expanded contracted hospital operations.

(3)For a reconciliation of our free cash flow, see the "Reconciliations of Non-GAAP measures" section below.

Consolidated cash flows

Consolidated cash flows from operating activities during the six months ended June 30, 2025 decreased compared to the six months ended June 30, 2024. The decrease was principally due to a decrease in operating results driven by an increase in interest expense combined with an increase in accounts receivable due to delays in collections related to the cybersecurity incident, as described above, and timing in other working capital items.

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

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

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

Dialysis center footprint

The table below shows the footprint of our dialysis operations by number of dialysis centers owned or operated:

U.S.International
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
20252024202520242025202420252024
Number of centers operated at beginning of period2,6612,6652,6572,675512427509367
Acquired centers13212—23190
Developed centers37996161
Net change in non-owned managed or administered centers(1)(1)——(8)—34—
Sold and closed centers(2)—(1)(3)(9)(2)(2)(4)(2)
Closed centers(3)(2)(2)(3)(7)(3)—(3)(4)
Number of centers operated at end of period2,6622,6722,6622,672513452513452

(1)Represents the change in the number of dialysis centers which we manage or provide administrative services to but in which we own a noncontrolling equity interest or which are wholly-owned by third parties, including our APAC joint venture centers which were consolidated in the fourth quarter of 2024.

(2)Represents dialysis centers that were sold and/or closed for which the majority of patients were not retained.

(3)Represents dialysis centers that were closed for which the majority of patients were retained and transferred to one of our other existing outpatient dialysis centers.

Share repurchases

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

Three months ended June 30,Six months ended June 30,
2025202420252024
Total repurchases**(1)****:**(dollars in millions and shares in thousands, except for per share data)
Shares3,0672,6556,7274,774
Amount paid(2)$446$376$996$616
Average paid per share(3)$144.00$140.14$146.69$127.98

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

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

(3)Excludes commissions and excise tax.

Available liquidity

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

See Note 6 to the condensed consolidated financial statements for components of our long-term debt and their interest rates.

We believe that our cash flow from operations and other sources of liquidity, including from amounts available under our senior secured credit facilities and our access to the capital markets, will be sufficient to fund our scheduled debt service under the terms of our debt agreements and other obligations for the foreseeable future, including the next 12 months. From time to time, depending on market conditions, our capital requirements and the availability of financing, among other things, we may seek to refinance our existing debt and may incur additional indebtedness. Our primary recurrent sources of liquidity are cash from operations and cash from borrowings, which are subject to general, economic, financial, competitive, regulatory and other factors that are beyond our control, as described in Part I Item 1A. "Risk Factors" of our 2024 10-K*.*

Reconciliations of Non-GAAP measures

The following tables provide reconciliations of adjusted operating income (loss) to operating income (loss) as presented on a U.S. generally accepted accounting principles (GAAP) basis for our U.S. dialysis reportable segment as well as for our U.S. IKC business, our U.S. other ancillary services, our international business, and for our total ancillary services which combines them and is disclosed as our other segments category, in addition to our corporate administrative support.

These non-GAAP or "adjusted" measures are presented because management believes these measures are useful adjuncts to, but not alternatives for, our GAAP results. Specifically, management uses adjusted operating income (loss) to compare and evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to establish operational budgets and forecasts and for incentive compensation purposes. We believe this non-GAAP measure is also useful to investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our business. We also believe this presentation enhances a user's understanding of our normal operating income by excluding certain items which we do not believe are indicative of our ordinary results of operations.

In addition, our effective income tax rate on income attributable to DaVita Inc. excludes noncontrolling owners' income, which primarily relates to non-tax paying entities. We believe this adjusted effective income tax rate is useful to management, investors and analysts in evaluating our performance and establishing expectations for income taxes incurred on our ordinary results attributable to DaVita Inc.

Finally, our free cash flow represents net cash provided by operating activities less distributions to noncontrolling interests, development capital expenditures, and maintenance capital expenditures; plus contributions from noncontrolling interests and proceeds from the sale of self-developed properties. Management uses this measure to assess our ability to fund

acquisitions and meet our debt service obligations and we believe this measure is equally useful to investors and analysts as an adjunct to cash flows from operating activities and other measures under GAAP.

It is important to bear in mind that these non-GAAP "adjusted" measures are not measures of financial performance under GAAP and should not be considered in isolation from, nor as substitutes for, their most comparable GAAP measures.

Three months ended June 30, 2025
U.S. dialysisAncillary servicesCorporate administrationConsolidated
U.S. IKCU.S. OtherInternationalTotal
(dollars in millions)
Operating income (loss)$523$26$(5)$36$57$(42)$538
Cybersecurity incident-related charges(1)13—————13
Adjusted operating income (loss)$536$26$(5)$36$57$(42)$551
Three months ended March 31, 2025
U.S. dialysisAncillary servicesCorporate administrationConsolidated
U.S. IKCU.S. OtherInternationalTotal
(dollars in millions)
Operating income (loss)$476$(29)$(4)$30$(3)$(34)$439
Adjusted operating income (loss)$476$(29)$(4)$30$(3)$(34)$439
Six months ended June 30, 2025
U.S. dialysisAncillary servicesCorporate administrationConsolidated
U.S. IKCU.S. OtherInternationalTotal
(dollars in millions)
Operating income (loss)$999$(3)$(10)$67$54$(76)$977
Cybersecurity incident-related charges(1)13—————13
Adjusted operating income (loss)$1,012$(3)$(10)$67$54$(76)$990
Six months ended June 30, 2024
U.S. dialysisAncillary servicesCorporate administrationConsolidated
U.S. IKCU.S. OtherInternationalTotal
(dollars in millions)
Operating income (loss)$1,076$(51)$(12)$33$(30)$(56)$990
Gain on changes in ownership interest(2)(35)—————(35)
Adjusted operating income (loss)$1,041$(51)$(12)$33$(30)$(56)$955

Certain columns or rows in the above tables may not sum due to the presentation of rounded numbers.

(1)Represents charges recognized to remediate a cybersecurity incident and restore systems during the second quarter of 2025. We have excluded these charges from our non-GAAP metrics as we do not believe they are indicative of our ordinary results of operations. See additional discussion above under the heading "Cybersecurity incident-related charges" within "U.S. dialysis results of operations".

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

Three months endedSix months ended
June 30, 2025March 31, 2025June 30, 2025June 30, 2024
(dollars in millions)
Income before income taxes$369$286$655$743
Less: Noncontrolling owners' income primarily attributable to non-tax paying entities(76)(69)(146)(144)
Income before income taxes attributable to DaVita Inc.$293$217$510$599
Income tax expense$94$54$148$137
Less: Income tax attributable to noncontrolling interests———(1)
Income tax expense attributable to DaVita Inc.$93$54$147$137
Effective income tax rate on income attributable to DaVita Inc.31.9%24.9%28.9%22.9%

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

Six months ended
June 30, 2025June 30, 2024
(dollars in millions)
Net cash provided by operating activities$504$664
Adjustments to reconcile net cash provided by operating activities to free cash flow:
Distributions to noncontrolling interests(151)(107)
Contributions from noncontrolling interests38
Maintenance capital expenditures(185)(171)
Development capital expenditures(80)(74)
Proceeds from sale of self-developed properties219
Free cash flow$112$327

Certain columns or rows may not sum due to the presentation of rounded numbers.

Off-balance sheet arrangements and aggregate contractual obligations

In addition to the debt obligations and operating lease liabilities reflected on our balance sheet, we have commitments associated with letters of credit, as well as certain working capital funding obligations associated with our equity investments in nonconsolidated dialysis ventures that we manage and some that we manage which are wholly-owned by third parties. For additional information see Note 7 to the condensed consolidated financial statements.

We also have potential obligations to purchase the noncontrolling interests held by third parties in many of our majority-owned dialysis partnerships and other nonconsolidated entities. These obligations are in the form of put provisions that are exercisable at the third-party owners’ discretion within specified periods as outlined in each specific put provision. For additional information on these obligations and how we measure and report them, see Note 11 to the condensed consolidated financial statements included in this report and Notes 16 and 23 to the consolidated financial statements included in our 2024 10-K.

For information on the maturities and other terms of our long-term debt, see Note 6 to the condensed consolidated financial statements.

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

As of June 30, 2025, we have outstanding purchase agreements with various suppliers to purchase set amounts of dialysis equipment, parts, pharmaceuticals and supplies. If we fail to meet the minimum purchase commitments under these contracts during any year, we are required to pay the difference to the supplier, as described further in Note 16 to the Company's consolidated financial statements included in our 2024 10-K.

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

New Accounting Standards

See discussion of new accounting standards in Note 13 to the condensed consolidated financial statements.

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