Leading Kidney Care Platform
Leverage ratio
Under our new senior secured credit facilities (the New Credit Agreement) dated August 12, 2019 and our prior senior secured credit facilities (the Prior Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cash and cash equivalents, not to
exceed certain limits under the New Credit Agreement, including short-term investments, divided by "Consolidated EBITDA". The leverage ratio determines the interest rate margin payable by the Company for its new Term Loan A and new revolving line of credit under the New Credit Agreement by establishing
the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratios were calculated using "Consolidated EBITDA" as defined in the credit agreement that was in effect at the end of each period. The calculation below is based on the last twelve months of "Consolidated EBITDA", as of
the end of the reported period and pro forma for routine acquisitions that occurred during the period. The Company's management believes the presentation of "Consolidated EBITDA" is useful to users to enhance their understanding of the Company's leverage ratio under its credit agreement in effect at that time.
The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for debt to net income attributable to DaVita Inc., net income attributable to DaVita Inc. or total debt as determined in accordance with United States generally accepted accounting principles (GAAP)..
For the periods ended June 30, 2019 and September 30, 2018, as allowed by our Prior Credit Agreement, the Company elected to calculate debt using GAAP in effect at the commencement of the Prior Credit Agreement; therefore, the Company did not adjust its debt balance to include the lease liabilities under
ASC Topic 842. The Company's calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures by other companies.
Rolling twelve months
(in millions)
2011(1)
2012(1)
2013(1)
2014(1)
2015(1)
2016(1)
2017(1)
2018 (1)
2019(2)
2020(2)
ended September 30,
2021
Net income (3)
$
478
$
536
$
633 $
723
$
270
$
880 $
664
$
159
$
707
$
783
$
984
Income taxes
316
360
381
446
296
456
(41)
358
280
314
315
Interest expense
225
269
398
383
383
385
395
451
398
272
250
Depreciation and amortization
267
344
529
591
638
720
777
591
615
630
667
Goodwill and other asset impairment charges
24
210
296
982
62
125
Noncontrolling interests and equity investment income, net
96
Stock-settled stock-based compensation
Loss contingency reserve
Debt prepayment, refinancing and redemption charges
Settlement charge
(Gain) loss on changes in ownership interest, net
Gain on settlement, net
49
༄ཝ
109
127
162
173
171
196
184
223
235
241
45
60
57
57
38
35
73
663
90
98
397
17
14
11
98
48
33
89
495
(404)
(23)
(86)
16
(530)
Valuation adjustment on disposal group
317
Other
80
"Consolidated EBITDA"
$
1,534 $
659
2,332
(13)
26
(29)
43
5
41
$
2,511
$
2,502 $
2,540
$
2,585
$
2,460 $
2,151 $
(12)
2,432 $
29
2
2,460 $
2,558
Total debt, excluding debt discount and other deferred financing costs
Letters of credit issued
$
4,513 $
48
$
4,561
$
8,576 $
116
8,692 $
8,434
$
8,520
$
71
96
8,504 $
8,616 $
9,226
94
9,320
$
9,192
97
$
9,289 $
$ 9,438 $
105
9,543
10,191 $
37
$
10,228
$
8,181
73
8,254
$
8,164
$
8,997
65
69
$
8,228
$
9,067
Less: Cash and cash equivalents including short-term investments (excluding DMG's
physician owned entities cash) (4)
Consolidated net debt
$
Last twelve months "Consolidated EBITDA"
Leverage ratio
$
1,534
2.7x
(394)
4,167 $
$
(534)
8,158 $
2,332 $
3.5x
(826)
7,678 $
2,511 $
3.1x
(1,190)
7,426 $
2,502 $
3.0x
(1,817)
7,503 $
2,540 $
3.0x
(1,108)
8,181 $
2,585 $
3.2x
(619)
8,923 $
2,460 $
3.6x
(502)
9,726 $
2,151 $
4.5x
(750)
7,504 $
2,432 $
3.1x
(333)
(750)
7,895 $
8,317
2,460 $
3.2x
2,558
3.3x
1) Amounts presented in this table represent the respective elements of and total for "Consolidated EBITDA" as defined and measured for the respective periods under the terms of the credit agreement governing our senior secured credit facilities. For certain line items, these amounts will differ from the amounts presented for
the same line items in our most recently filed consolidated financial statements for the same periods because those financial statement line items are presented on a continuing operations basis, while the calculation of "Consolidated EBITDA" provided in our credit agreement is on a consolidated basis and as such also includes
certain line items included in net (loss) income from discontinued operations.
2) The credit agreement governing our new senior secured credit facilities requires divestitures to be excluded from the calculation of "Consolidated EBITDA;" as a result, the 2019 and 2020 amounts presented in this table give pro forma effect to the DMG sale as if it had occurred on January 1, 2020.
3) The reported net income for 2019 and 2020 is our reported net income from continuing operations attributable to DaVita Inc. as the New Credit Agreement requires divestitures to be reflected on a pro forma basis, as such DMG is excluded from our leverage ratio calculation. The reported net income for all prior years is our
reported net income attributable to DaVita Inc.
4) This excludes amounts not readily convertible to cash related to the Company's non-qualified deferred compensation plans for all periods presented. The New Credit Agreement limits the amount deducted for cash and cash equivalents, including short-term investments, to the lesser of all unrestricted cash and cash
equivalents, including short-term investments of the Company or $750 million.
66
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