UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 28, 2023
DAVITA INC.
(Exact name of registrant as specified in its charter)
DE | 1-14106 | 51-0354549 | ||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2000 16th Street | ||||||||
Denver, | CO | 80202 |
(Address of principal executive offices including Zip Code)
(720) 631-2100
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: | Trading symbol(s): | Name of each exchange on which registered: | ||||||||||||
Common Stock, $0.001 par value | DVA | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On April 28, 2023, DaVita Inc. (the “Company”) entered into a Third Amendment (the “Third Amendment”) to that certain Credit Agreement dated as of August 12, 2019 (as previously amended, restated, supplemented, or otherwise modified prior to the date of the Third Amendment, the “Credit Agreement”), in each case, by and among the Company, its subsidiary guarantors, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent, collateral agent and swingline lender (“Wells Fargo”).
The Third Amendment provides for (i) a new five-year secured term loan A facility in an aggregate principal amount of up to $1.25 billion (the “New A-1 Term Facility”) to refinance amounts outstanding under the Company’s prior $1.75 billion secured term loan A facility maturing in August 2024 (the “Prior Term A Facility”) and (ii) a new five-year secured revolving credit facility in an aggregate principal amount of up to $1.5 billion (the “New Revolving Facility” and, together with the New A-1 Term Facility, the “New Facilities”) to refinance amounts outstanding under the Company’s prior $1.0 billion secured revolving credit facility maturing in August 2024 (the “Prior Revolving Facility”).
The Third Amendment also incorporates the provisions of the Second Amendment to the Credit Agreement, dated as of April 3, 2023, which among other things, replaced interest provisions based on the London Interbank Offered Rate (“LIBOR”) with the forward-looking term rate based on the secured overnight financing rate that is published by CME Group Benchmark Administration Limited (“Term SOFR”).
Pursuant to the Third Amendment, borrowings under the New Facilities bear interest, at the Company’s option, based on (a) for loans denominated in U.S. Dollars, (i) the Base Rate (as defined below) plus the Applicable Margin, or (ii) Term SOFR, plus the Applicable Margin and plus the Term SOFR Adjustment (as defined below); (b) for loans denominated in Euros, the Eurocurrency Rate (as defined below); or (c) for loans denominated in pounds sterling, the Daily Simple RFR (as defined below). The “Base Rate” is defined as the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 50 basis points, (ii) the prime commercial lending rate of Wells Fargo as established from time to time and (iii) the Term SOFR for an interest period of one month plus 100 basis points; provided that if the Base Rate is negative it shall be deemed to be zero. The “Applicable Margin” for the New Facilities is initially 200 basis points, in the case of loans based upon the Term SOFR, EURIBOR (as defined below) or Daily Simple SONIA (as defined below), and 100 basis points in the case of Base Rate loans; provided that after the date on which the Company shall have delivered financial statements for the fiscal quarter ending September 30, 2023, the Applicable Margin with respect to the New Facilities will be at a rate between 0.25% and 2.25%, based on a leverage ratio based grid. The “Term SOFR Adjustment” is defined as 10 basis points per annum. The “Eurocurrency Rate” is defined as the Euro Interbank Offered Rate (“EURIBOR”), plus the Applicable Margin. The “Daily Simple RFR” is defined as the daily Sterling Overnight Index Average with a 5 London banking day lookback (“Daily Simple SONIA”), plus the Applicable Margin.
Undrawn amounts under the New Revolving Facility accrue a commitment fee (i) initially, at a per annum rate of 0.30% and (ii) after the delivery of the financial statements for the fiscal quarter ending September 30, 2023, at a per annum rate between 0.15% and 0.35%, based on a leverage ratio based grid.
The New A-1 Term Facility amortizes on a quarterly basis beginning September 30, 2023 at a rate of (i) 2.5% per annum during the first year following the date of effectiveness of the Third Amendment (the “Third Amendment Effective Date”), (ii) 5.0% per annum during the second, third and fourth years following the Third Amendment Effective Date and (iii) 7.5% per annum during the fifth year following the Third Amendment Effective Date, with the balance to be paid on the stated maturity date of the New A-1 Term Facility.
The Third Amendment also, among other things, includes provisions permitting the Company, in the first year following the Third Amendment Effective Date and in consultation with certain lenders, to (i) establish specified key performance indicators (“KPIs”) with respect to certain environmental, social and governance targets of the Company and its subsidiaries and (ii) further amend the Credit Agreement (such amendment, if any, the “ESG Amendment”) to provide for certain adjustments to the commitment fee rate applicable to the New Revolving Facility and the Applicable Margin applicable to the New Facilities, in each case, based on the Company’s or such subsidiaries’ performance against the KPIs and in amounts and on the terms to be set forth in the ESG Amendment, if any.
Proceeds of the New Facilities have been or will be used (i) to finance the repayment of all outstanding amounts under the Company’s Prior Term A Facility and Prior Revolving Facility, (ii) for the payment of fees, commissions and expenses in connection with each of the foregoing and the Third Amendment itself and (iii) for working capital and general corporate purposes (which may include, without limitation, stock repurchases, acquisitions and investments).
The Company and its affiliates may from time to time engage certain of the lenders under the Credit Agreement to provide other banking, investment banking and financial services.
The foregoing description of the Third Amendment is qualified in its entirety by reference to the complete terms and conditions of the Third Amendment, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference. The Third Amendment has been incorporated by reference herein to provide stockholders with information regarding its terms. It is not intended to provide any other information about the Company or the Company’s subsidiaries that are guarantors thereunder, or other subsidiaries and affiliates of the Company. For example, the Third Amendment contains representations and warranties that were made solely for the benefit of the other parties to the Third Amendment and should not be relied upon as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. All such statements in this report, other than statements of historical fact, are forward-looking statements and include, among other things, statements about the potential ESG Amendment and the expected use of proceeds of the New Facilities. Words such as “expect,” “intend,” “will,” “may,” “plan,” “anticipate,” “believe,” “continue,” “target,” and similar expressions are intended to identify forward-looking statements. The Company bases its forward-looking statements on information available to it on the date of this report, and 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 otherwise required by law. Actual results and other events 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, the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and the other risks and uncertainties discussed in any subsequent reports that the Company files with the Securities and Exchange Commission from time to time.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | ||||
Third Amendment, dated as of April 28, 2023, to that certain Credit Agreement, dated as of August 12, 2019, by and among DaVita Inc., certain subsidiary guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent, collateral agent and swingline lender. | |||||
104.0 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DAVITA INC. | ||||||||
Date: April 28, 2023 | By: | /s/ Joel Ackerman | ||||||
Joel Ackerman | ||||||||
Chief Financial Officer and Treasurer |