DaVita Inc.
Analysis
DaVita's treatment volumes turned positive in 2026 after years of decline, and management raised guidance for the year. But each treatment now earns less as expired subsidies cut commercially insured patients, so clinical gains must outrun the fall in revenue per treatment.
- Volumes turned positive after years of decline.
Treatments turned positive in 2026, and management raised its volume forecast from flat to a 25 to 50 basis point gain. Better mortality and transfers from closed Fresenius clinics drove it. What share of the volume gain came from Fresenius?
- What each treatment earns is falling.
Revenue per treatment fell in Q2 FY2026, and management guides to just 1% to 2% growth this year. Lost exchange subsidies cost about $40 million, and binders moving into Medicare cut it further. What is driving revenue per treatment down?
- The big earnings jump comes from fewer shares, not faster growth.
Management guides to 33% earnings-per-share growth in 2026 on just 3.2% operating income growth. Buybacks, with the diluted share count down 26% in two years, explain most of the gap. So per-share profit grows faster than the business.
- Sustained mortality improvementThe bull case is that DaVita's gains in keeping dialysis patients alive are clinical and repeatable, so each year adds treatments rather than merely slowing losses.
- Value-based care profitabilityValue-based kidney care has crossed into profit, giving DaVita a second earnings stream that grows without adding dialysis chairs.
- Share count reductionStrong free cash flow funds steady buybacks, so per-share profit can rise faster than the operating profit the business generates.
- Treatment growth below targetThe bear case is that treatment growth stays below the company's own target for years while payers shift toward plans that reimburse less.
- Commercial mix erosionExpiring insurance subsidies push patients into lower-paying coverage, and government-set dialysis rates rise slower than the wages and supplies the company buys.
- Technology spending growthSpending on systems and data work is growing faster than revenue, so higher patient volume produces less additional profit than it used to.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$1K | Mar 17 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$250K | Feb 10 | May 13 |
Julie Johnson Democratic · House · TX-32 | Purchase | ≥$1K | Sep 23 | Aug 5 |
Julie Johnson Democratic · House · TX-32 | Sale | ≥$1K | Sep 23 | Aug 5 |
Alan Armstrong Republican · Senate · OK | Purchase | ≥$1K | Mar 27 | Jul 21 |
Congressional trading data provided by QuiverQuant
How DaVita turned $13.6B of revenue into $2.0B of operating income.
| Revenue | ||
|---|---|---|
| U S Dialysis And Related Lab Services | $11.7B | ▲ 3.65% YoY |
| Total revenue | $13.6B | |
| Gross profit | $3.7B | 27.0% |
| Operating income | $2.0B | 15.0% |